Weekly Update – 24 March 2019 – LS Trader

Stocks

The Nasdaq 100 completed a trend reversal breakout to the upside this week and reached a new high for the move on Friday before closing the day lower. The long-term trend is up for the Nasdaq 100, S&P 500 and Dax, but remains down for the Nikkei, which remains the weakest of the four stock indices that we trade at LS Trader.

Commodities

Metals have seen weakness this week with the trend for Copper coming to an end for now with a break of support. Gold and Silver both edged higher. Palladium hit a new all-time high but put in a reversal on Friday, giving back all of the gains for the week. The weekly chart indicates a shooting star, which may indicate further weakness this week. The trend is mature, the sentiment is high, and weekly volatility is at its highest ever level.

Currencies

The dollar has had a mixed week, trading sharply lower and then reversing on Friday, forming a v-bottom on the daily Dollar Index. The long-term trend remains up for the Dollar Index. The long-term trend continues to favour the dollar for all the majors except for GBP/USD, NZD/USD and USD/JPY.

Note that the January EUR/USD effect is still in place, and suggests that the January high of the year, currently at 1.1718 basis the back-adjusted continuous contract, currently on June, will not be exceeded.

Interest rate futures

As anticipated and covered in recent weeks, interest rate futures have risen to new highs for the current move. We have been saying for months that interest rates would move lower, not higher. Rates move inversely to price, so higher prices equals lower rates and vice versa. This is a bull market in interest rate futures.

Weekly Update – 17 March 2019 – LS Trader

The S&P 500 completed a change of long-term trend reversal back to up this week, and the Nasdaq 100 and Dax may complete the same this week. Interest rate futures also resumed their long-term uptrend, while the dollar and most commodities remain mixed.

Stocks

Stock indices have shrugged off declining momentum and have rallied this week. The S&P 500 completed a breakout and change of long-term trend to up for the first time since October last year. The Nasdaq 100 may complete a similar trend change this week, as could the Dax. The Dax has been in a downtrend since September. All three markets mentioned above have seen their RSIs already breakout above 60, entering the bull range.

Commodities

Copper and Palladium both held above support this week, with Palladium rallying back to just below recent all-time highs. Copper will likely test support again this week.

The energy markets continue to rally against the long-term trend and are still some distance away from a change of trend to up.

Most of the grains markets have rallied sharply from their lows this week, and resistance will likely be tested on Monday.

Currencies

The currency markets remain mixed with the long-term trend mostly favouring the dollar. The British Pound did make an intra-day breakout to the upside, so far without follow-through, and remains in an uptrend against the dollar. The COT report continues to show a significant net long position in the Pound from commercials.

Interest rate futures

Interest rate futures saw further strength and some breakouts this week. The markets have closed with their RSIs either at or just below the 60 level. A decisive break above 60 would suggest further rallies to test the January highs. The long-term trend remains up across the board.

Weekly Update – 10 March 2019 – LS Trader

The dollar uptrend resumed this week, and there could be further long dollar breakouts in the coming days. Interest rate futures also look set to resume their long-term uptrend, while stocks continue to look tired as momentum wanes.

This week sees quarterly stock and currency expiration, where the March contract rolls to the June contract.

Stocks

From last week on stocks: “It is also notable that volatility and volume have contracted and that there is bearish momentum divergence. This shows that the current rallies are tired.” The stock markets have shown continued weakness this week as the corrective rally from the late December lows continues to look like it may be in its latter stages.

Commodities

Copper and Palladium have both seen weakness this week, and it’s likely that both markets will test support in the coming day or so, with the trends under pressure. Palladium has been a monster move, and the LS Trader system has been long since the 19th of September. If the trade is exited this week, which appears likely, it will be the largest winning trade of the year to date.

Currencies

From last week on the dollar: “The long-term trend remains up for the dollar against most of the majors, and there are possible long dollar breakouts within range this week. These include resumptions of the long-term trend for the Dollar Index (up) and the EUR/USD (down)”. Both of these markets broke out as expected, resuming the long-term dollar uptrend. Further breakouts this week are within range for the dollar against the Australian and Canadian dollar.

Interest rate futures

From last week on interest rate futures: “Bull market RSI support is being tested with the markets closing just above the 40 level on Friday”. RSI bull market support held firm and interest rate futures put in a rally, and we could see multiple breakouts this week. The long-term trend remains up across the sector, and new highs for the current move could be seen within the coming weeks.

Weekly Update – 3 March 2019 – LS Trader

Stocks

Global stocks have continued to recover since the late December lows. A change of long-term trend to up is moving within range, but there is clear resistance at current levels. It is also notable that volatility and volume have contracted and that there is bearish momentum divergence. This shows that the current rallies are tired.

Commodities

Gold and Silver have both seen considerable weakness this week, and we exited our long Gold trade on a break of resistance. In spite of this weakness, Palladium made new all-time highs and Copper also made new highs for the current move.

Currencies

The long-term trend remains up for the dollar against most of the majors, and there are possible long dollar breakout within range this week. These include resumptions of the long-term trend for the Dollar Index (up) and the EUR/USD (down). USD/JPY is within range of a change of long-term trend breakout to up.

The British Pound is the exception, which tested long-term trend resistance this week and is in range of completing a change of long-term trend to up.

Interest rate futures

Interest rate futures remain in long-term uptrends, but all have seen weakness this week. Bull market RSI support is being tested with the markets closing just above the 40 level on Friday. Next week could be a pivotal week for the sector because if support is broken there is plenty of room for additional weakness before the next level of support is reached.

Weekly Update – 24 February 2019 – LS Trader

The past week was a shortened week due to the Presidents’ Day holiday in the US. It was also a very active week for rollovers as multiple March contracts were rolled forward to the next contracts.

Stocks

The S&P 500 edged higher this week but with volume and volatility are in decline. The RSI hit 70.9 on Wednesday, its highest level since the 29th of August. The long-term trend remains down. The Nasdaq 100 is trading in a very similar fashion to the S&P 500.

All 4 of the stock indices that we trade at LS Trader continue to grind higher in the short-term, in counter-trend rallies to the primary long-term trend, which remains down.

Commodities

Metals remain strong with new highs being seen this week in Gold and Palladium, the latter of which was a new all-time high. High-Grade Copper completed a change of long-term trend to up, having rallied to its highest level since July last year. Silver, which is the weakest of the metals at present, may test resistance in the coming week or so.

Currencies

The long-term trend remains up for the dollar against most of the majors, and therefore, for the Dollar Index. However, the index moved lower this week, breaking below short-term support printed the prior week. Volatility continues to contract and does volume. The RSI remains in the bullish range.

The Euro, which is a near-perfect inversion of the Dollar Index naturally moved higher this week but remains below resistance. Recall that based on the EUR/USD January effect, that the January high at 1.1632 basis the continuous back-adjusted contract (currently on March) should not be exceeded if that pattern is to hold this year.

The British Pound, much the focus of Brexit, continues to climb higher and is beginning to move towards a potential change of long-term trend to up. The Commitments of Traders report continues to show massive buying from commercials of the British Pound. For now, the long-term trend remains down.

Interest rate futures

The long bond pierced resistance on Monday but as of yet without followthrough. The RSI remains in the bull range, and the long-term trend is up, Volatility is at extremely low levels, and a significant move is likely to be seen soon. The long-term trend remains up for the sector.

UK Long Gilts are close to their all-time highest level, which means that ten-year interest rates are near their all-time lows.

 

Weekly Update – 17 February 2019 – LS Trader

This Monday is Presidents’ Day in the US, so US markets will be closed, and it will, therefore, be a shortened trading week. Seasonally we are in a bullish time of year for stocks, but the long-term trend remains down.

Elsewhere, the trend remains up for the dollar, metals and interest rate futures, and mixed for the remaining commodities.

Stocks

The Nasdaq 100 is leading stocks to the upside, and the RSI has moved decisively above the 60 level, which is bullish. However, the long-term trend remains down for global stocks.

Commodities

Gold managed to hold just above support and closed very near its highest close in almost ten months. The long-term trend is up for all the metals except for Copper. Copper is, however, within the range of an upside breakout and change of long-term trend to up.

Palladium remains in a monster bull market and posted new all-time highs on Friday, as well as making an all-time closing high. Sentiment remains elevated, but it has been at or near extremes many times since September. The LS Trader system has been long Palladium since the 19th September 2018, and it is by far the most profitable open position at present.

Currencies

The Dollar has had a mixed week, gaining against some majors and declining against others. The Dollar Index itself tested resistance but has been unable to push through. The RSI is also finding resistance at the 60 level. The Euro fell to its lowest level since April 2017, basis the back-adjusted continuous contract, but did see some buying coming in from the low on Friday, with a strong demand tail evident on the daily charts. The RSI is finding support at the 40 level, so last week’s low appears to be a critical support level.

Interest rate futures

Interest rate futures have been unable to break through resistance so far, but remain in long-term uptrends. The UK Long Gilt did break resistance intra-day, but so far without follow-through.

Commitments of Traders reporting data is catching up after the US government shutdown. The data is still a week or so behind, but still shows commercials as net long, indicating further price strength and lower interest rates.

Weekly Update – 10 February 2019 – LS Trader

The dollar has gained ground this week and may be on the verge of resuming its long-term uptrend. Stocks and energies may both be coming to the end of their corrective rallies and may resume their long-term downtrend soon.

Stocks

The RSI cleared the 60 level on the S&P 500, but price made no progress for the week as the market closed flat. Both the Dax and the Nikkei have been weaker than their US counterparts, and these two indices look likely to make downside breakout ahead of the Nasdaq 100 and S&P 500, but decent-sized moves will be required.

The long-term trend remains down for global stock indexes.

Commodities

Crude Oil turned lower from price and RSI resistance. Bear market resistance at the 60 level is evident on the daily chart of Crude. The long-term trend remains down, and prices may start heading lower towards the December lows soon.

Natural Gas completed a change of long-term trend to down as expected, following a breakout to new lows for the move.

The metals markets were mostly lower this week but remain in a long-term uptrend, except for Copper. Copper, however, has broken the 60 level on the RSI this week and could complete a change of long-term trend to up in the coming weeks.

Currencies

Dollar strength looks as though it is resuming. The Dollar Index has closed higher in 6 of the last seven trading days. The RSI is testing the 60 level. If we see a decisive move above 60, we may see a rally higher to test the mid-December high.

The Euro looks set to test support once again and could break to new lows for the year. This would indicate, that if the January EUR/USD effect is to be correct this year, that the high of 1.1632 made on the 10th January will be the high of the year.

Interest rate futures

Interest rate futures look poised for new breakouts to the upside and a resumption of the long-term uptrend. The RSI has closed just above the 60 level on the 30 Year T-Bond and remains in the bull range. Strength is evident across the sector, with the short-term three month Eurodollar futures also likely to breakout this week.

The 3month Eurodollar could be one of the big moving markets this year as many get caught on the wrong side of interest rate expectations. Many continue to expect higher rates, but the COT positioning and other factors suggest that will be wrong and that interest rates will reverse and move lower, not higher (note, futures prices move inversely to rates).

The UK Long Gilt made its all-time high weekly close on Friday, and we could see a breakout to new highs this week. As with the US, interest rates look set to be headed lower, not higher.

Good trading

Phil Seaton

LS Trader

Weekly Update – 3 February 2019 – LS Trader

January has been a fairly quiet month from a trading perspective with many markets in sideways ranges, digesting last year’s moves. That is likely to change and could do so from as early as this week as multiple markets are on the cusp of breakouts.

The long-term trends remain intact and are still down for stocks, up for metals, down for energies, up for interest rates, and up for the dollar overall.

Stocks

The January effect says that as goes January for stocks, so goes the rest of the year. January was a bullish month for stocks, which put in a considerable counter-trend rally. From its low point in early January, the S&P 500 has rallied almost 500 points. That rally becomes over 400 points if you start at the low print on December 26th. The season record, therefore, points to a good year for stocks. However, for now, the long-term trend is still down, and breakouts in either direction are out of range, so we’ll have to watch stocks from the sidelines for now and see what unfolds.

Commodities

The energy markets have spent much of the past three weeks going sideways. The long-term trend remains down. Crude Oil has completed a head and shoulders pattern with a break of the neckline, which suggests strength may continue. This gives a target of 6745, a long way above current prices. However, the long-term trend is still down, and the RSI has been unable to clear the 60 level decisively.

Natural Gas, currently the weakest market in the sector, looks poised to complete a change of long-term trend and breakout to the downside on the open this week.

Currencies

We’ve covered the January EUR/USD effect in recent weeks, which states that there is a strong tendency for this currency to put in its low or high for the year during January. Based on the March futures contract, those levels are 1.1337 and 1.1632. If this pattern, which has a 76% accuracy in past years holds, a break of either of those two levels would indicate which direction the currency is likely to move for the year. For now, the long-term trend remains down, so the technical picture favours that the high is in.

However, with the Federal Reserve has made mistakes with recent rate rises in the US, and hinted this week that those hikes would be paused and possibly reversed (as we suggested would be the case in past issues), would indicate dollar weakness, which would be bullish for the Euro. As ever, we will let the market tell us which way it wants to go and jump on for the ride when the timing is right. Until then, we wait.

Interest rate futures

Interest rate futures did see an increase in volatility this week, as we indicated in last week’s issue. However, the move has so far been insufficient for a breakout. The long-term trend remains up for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update – 27 January 2019 – LS Trader

Many markets continue to consolidate, with moves being seen against the primary trend. There are, however, several markets within range of breakouts. The current long-term trends are down for stocks, up for metals, down for energies, up for interest rate futures, and mixed for the remaining commodities.

Stocks

Stocks have continued to rally against the primary trend this week, but the critical 60-level on the RSI, which is bear market resistance, has not been taken out on the S&P 500 or Nasdaq 100. Also, volume was much more substantial on the decline than it has been on the rally, where volume has continued to decline. This continues to support the notion that the long-term trend is down and that we will likely see stocks turn lower again soon and test the late December low.

Commodities

The metals have seen some weakness this week, before reversing sharply on Friday. Both Gold and Silver broke support, but may soon breakout back to new highs for the current move. Gold will likely breakout on Monday. Palladium, still by far the strongest of the metals, bounced off support and remains bullish.

Currencies

The British Pound has made quite a decisive upside rally over the past couple of weeks and looks to be heading for a change of long-term trend to up. This week has seen the RSI decisively break above the 60 level to enter the bull range. We wrote last year how the COT report showed commercials with a record all-time net long position, which flies in the face of conventional wisdom about Brexit being damaging to Britain. We can’t tell what the current commercial position is due to the US government shutdown.

The Euro dipped to a slightly new low against the Dollar but reversed sharply on Friday. The trend remains down. The Dollar also broke out against the Swiss franc, but so far without follow-through. The Dollar Index remains in a trading range, as it has been for the past several months.

Interest rate futures

Interest rate futures continue to consolidate but remain in a long-term uptrend across the board. The 30 Year T-Bond has undergone significant volatility compression so far this week, suggesting that a significant move is not far off.

Weekly Update – 20 January 2019 – LS Trader

Monday is Martin Luther King Jr. Day in the US, so most US markets will be closed. We’re at a fascinating juncture in multiple markets where we could be at or near a turning point ahead of potentially resuming the prevailing long-term trends.

Stocks

Stocks have continued to rally this week. The S&P 500 has rallied to just shy of the 61.8% retracement of the decline from the 21st September all-time high. The RSI is testing bear market resistance at the 60 level, so this could be a critical resistance level for stocks. This rally is still viewed as corrective at this stage but if it continues towards the 78.6% retracement levels that would suggest we could see a complete retracement. For now, the odds favour a turn lower and a test of the recent lows.

Commodities

Palladium rallied to a new all-time high this week but has pulled back from Thursday’s high, where an extremely high bullish sentiment had been printed. It’s possible that we may see more short-term weakness, but the trend remains bullish, and the market is well above support.

The energy markets have continued their corrective rallies and have now retraced 38.2% of the decline from the October high.

The grains markets are starting to show some signs of life, and we could be seeing a massive bottom forming in this sector, with some potential upside breakouts and changes of the long-term trend to up in the offing.

Currencies

The Dollar Index has rallied from the recent low. The RSI never broke the 40 level and therefore remains in the bull range, and the long-term trend is up.

EUR/USD has fallen for seven consecutive trading days and is now moving towards the lower end of the January range. As per previous updates, we’re on the lookout to see if the January effect holds this year with the high or low for the year being printed this month.

Interest rate futures

Interest rate futures markets declined this week and broke support in the process, bringing an end to the recent uptrend. The long-term trend remains up for the sector, but we could see bull market support at 40 on the RSI tested this week.

Good trading

Phil Seaton

LS Trader