Weekly Update 7th April 2013 – LS Trader

Stocks initially rose to new highs for the current move but then backed off. Stocks remain at a critical juncture as we covered in last week’s update and the prospect for a large move one way or the other seems increasingly likely, especially if the markets break to the downside.

Commodities have been mostly bearish and look to be continuing the long term bear market, and currencies have been mixed. Interesting times and plenty of good trading opportunities lie ahead.

Stocks

The S&P 500 cash came within 3 points of an all time high but then backed off before finding support just below 1540. The index therefore still remains below the all time intra-day high basis the cash S&P 500 at 1576.09 reached on 11 October 2007. Whether we see new all time highs still remains to be seen. The rejection of the lows on Friday led to the formation of a hammer on the daily charts, which is bullish and also confirms the support area around 1540. However, should that support area be breached we may see a sharp sell off back to the 1477 area of the February low.

Commodities

Gold ended lower for the week but has recovered since falling below the February low mid-week. This recovery is in the formation of a morning star pattern, which is a bullish reversal pattern, but the trend is still very much down. Resistance for June gold remains in place around $1620 and the market is short term bearish below that level. Silver followed a similar path to gold, but was more bearish, ending the week lower by 3.89%. Silver also fell below the February lows that we have written about for the past few weeks, and unlike gold, closed below them. This may lead to a test of the June lows around 2628. Last week’s lows now become critical support for both of these markets, and should those support levels be broken, we may see an acceleration to the downside.

Most commodities had a bearish week and crude was no exception. The long term trend for crude oil has been down for quite some time and the market was unable to complete a change of trend this week and subsequently had a bearish week as did all markets in the energy sector with the exception of natural gas.

Grains in particular had a bearish week. Regular readers will know that the LS Trader system is bearish on grains and our long term trend analysis calls for lower grains prices in 2013 that should completely erase the bull market from last year. This projection remains on track and we may see further declines in the week ahead.

Currencies

The dollar has had quite a volatile week and in particular the dollar index has been quite volatile. Thursday saw the index push to a new high for the current move, only for the market to more than erase those gains on Friday and fall to almost a 2 week low. This reversal may now pressure the market further in the short term, but long term the trend remains up. Should the index be able to clear last week’s high in the coming week, we will likely see an immediate resumption of the long term uptrend.

The Euro fell to new lows for the current move but quickly recovered and went on a 3 day rally. The Euro has so far failed to generate sufficient weakness for a change of trend to down, so the long term uptrend remains in place. We may now see the uptrend resume and we may see a continuation higher to around $1.3360.

Interest rate futures

In last week’s update on the 30 year T bond we wrote “This makes Monday’s trading key for this market as a move lower would confirm the resistance level, but a break may lead to a continuation higher over the coming weeks.” Monday was a bullish day for the long term bonds and the week culminated with a decent 3 day rally that has taken the market to its highest level in 16 weeks. The long bond may now continue higher towards the November highs and the 150 area.

The 5 and 10 year notes also had bullish weeks, with the former pushing to new all time highs. The long term trends are mostly up for this sector.

Good trading

Phil Seaton

Weekly Update 30th March 2013 – LS Trader

Stocks have continued to edge higher during a week that has seen relatively little volatility in the currency markets, which have mostly traded sideways. The big price moves this week have come from the commodity sector, in particular the grains markets, which have continued their long term bear market trend with sharp selling on Thursday. This is very much in line with LS Trader’s proprietary trend analysis, which continues to look for lower grains prices in 2013.

Monday is a Bank Holiday in the UK, but US markets are open as normal so we should see a return to more normal trading following a quite week this week.

Stocks

The S&P 500 hit a new all time closing high this week but still remains below the all time intra-day high basis the cash S&P 500 at 1576.09 reached on 11 October 2007. We may well see that level tested this week as the markets are typically bullish following a long holiday weekend.

The Nasdaq 100 remains just below the 2815 resistance level on the June contract, and that level will likely be tested this week. Our highly profitable Nikkei trade continues to run, but as per the US indices that we trade at LS Trader, the range remains tight.

One thing that is of importance is the near record short position that has built up by commercial funds as reported in last weeks COT (Commitment of Traders) report. Commercial funds moved to within 1% of their record net short position. At the same time, hedge funds have reached a record net long position. With both major players at such extremes, a big move is in the offing and it could go either way. This battle between commercials and hedgers probably explains the tight range seen in stocks and suggests that a break of the range, either up or down could trigger a large move. In 2007, commercial selling began a month ahead of the 2007 top and we all know what happened then. If selling breaks through support, watch out below.

Commodities

Resistance for June gold remains in place around $1620 and the market is short term bearish below that level. Critical support remains in place at the February low. Silver has edged lower and is approaching critical support likely ahead of gold. The February lows remain the key levels to watch for both markets.

Last week we wrote on U.S crude: “Friday saw a bullish engulfing pattern printed on the daily charts which suggests upside momentum may continue next week and that we may see a test of $95 on the May contract.” The 200 day moving average appears to have provided support once again for crude and this led to a bullish week and a gain of 3.76%. The $100 barrel level is once again in range, as is a change of trend to up.

Currencies

In last week’s update we wrote that critical resistance on the June dollar index at 83.42 needed to be cleared in short order for the uptrend to continue near term. Initially we saw the index move lower but it did regain and go on to exceed the resistance level, posting a new high for the current move at 83.52. That level now is the new resistance level that needs to be cleared to keep the dollar bull trend intact. For now the long-term trend is up.

The Euro fell to its lowest level since November and may be heading lower for a test of critical support at $1.27 basis the June contract. If that level can be taken out, an extended decline towards $1.21 may follow over the coming months. A move such as this will not unfold in a straight line and there will be some corrections along the way. The trend for the long term looks lower.

Interest rate futures

Interest rate futures shot higher this week for a third straight week. As was the case last week, the long term trend is still up for Eurodollars and 5 year T-notes, but remains down for the 10 year and 30 year markets. The 30 year T Bonds reached a critical resistance level on Thursday and then edged lower, forming a spinning top on the daily charts. This makes Monday’s trading key for this market as a move lower would confirm the resistance level, but a break may lead to a continuation higher over the coming weeks.

Good trading

Phil Seaton

Weekly Update 24th March 2013 – LS Trader

The past week has seen stocks unable to reach new all time highs and has also seen some further dollar weakness. Commodities have remained mixed, but are mostly trending lower as before. The long term trends still remain intact, which are currently up for stocks and the dollar and mostly down for commodities.

Stocks

The S&P 500 fell short of hitting all time highs once again and as we wrote in last week’s update, this continues to be bearish divergence from the Dow, which has hit all time highs recently and basis the June futures contract, came within 5 ticks of doing so again this week. Basis the cash S&P 500, the market is some 20 points away from all time highs of 1576.09 on 11 October 2007. It still remains unclear as to whether we will see those all time highs reached in this market.

The all time highs on the Dow have also been unconfirmed by the Nasdaq 100, which is obviously a long way from all time highs, but the Nasdaq also remains below its 2012 high. 2815 on the June contract remains the key resistance level on this market.

The Nikkei hit new 4 ½ year highs this week but ended the week up by just 0.08% following a decline late in the week. The long term trend is still very much up and this will continue to be the case for the foreseeable future, due to the extent and duration of the recent rise, which as we wrote about last week has so far generated in excess of 3150 spread betting points profit for the LS Trader system, and the trade is still in progress.

Commodities

Gold and silver are historically highly correlated so when we see moves such as we have in the past week where gold has risen and silver has declined, this usually precedes a trend reversal. The divergence between these 2 highly correlated metals will not likely continue for much longer and it could be that the bear sash pattern printed on silver’s daily chart on Friday, may take both metals back down towards the critical support shelf that we wrote about last week. If these markets do head down further towards support, a break of key support could open the door for a larger decline, but if support holds, we may get a further bounce for gold, followed by silver. The longer term trend remains down for both markets.

As we suggested may happen last week, Crude Oil did test and break short term resistance in what was quite a volatile week for the black stuff. The 200 day moving average appears to have provided support and Friday saw a bullish engulfing pattern printed on the daily charts which suggests upside momentum may continue next week and that we may see a test of $95 on the May contract.

The recent highs at 140.30 on orange juice appear to be critical as the market has been unable to clear that level following several attempts. This may pressure the market lower if further attempts fail. Major resistance stands at 144.15, the December 2012 high, which remains for now the upside target.

Last week we wrote about our target of 136.16 on April Feeder cattle and suggested that if that level was reached and subsequently broken, we may see an extended decline. This week saw feeders continue to decline and fall as far as 136.78 so that scenario remains intact.

Coffee also continued lower having resumed the long term downtrend and we still have initial targets at 130, and may see a move as low as 123 further out.

Currencies

The dollar has seen a continuation of short term, counter trend weakness against most of the majors during the past week. Critical resistance at 83.48 on the June dollar index is still holding and that level needs to be cleared in fairly short order for the uptrend to continue in the near term. The longer term uptrend still remains intact for now.

The British pound trend ended this week following a continuation of short term strength in GBP/USD but this was still a nice profitable downtrend, netting the LS Trader system just shy of 600 pips profit.

Interest rate futures

Interest rate futures have edged higher for a second week with only the 3 month Eurodollars ending lower. Eurodollars have been in a long term uptrend for what seems like forever but there are signs that this could be changing soon. This week saw quite a decent uptick in volatility in this market and a fairly decent drop in prices that took the market lower than it has been in 7 weeks.

The long term trend is still up for Eurodollars and 5 year T-notes, but remains down for the 10 year and 30 year markets.

Good trading

Phil Seaton

Weekly Update 17th March 2013 – LS Trader

The LS Trader System has continued with its strong start to the year as for the most part the markets are trending fairly well and this has led to the system reaching new equity highs for the year.

The week has also seen continuing new all time highs for stocks and the dollar has shown a bit of temporary weakness. Commodities have for the most part continued south in line with LS Trader’s expectations and proprietary trend analysis.

Stocks

The stock markets continue to press higher, reaching either new all time highs as in the case of the Dow, new multi-year highs in the Dax and the Nikkei, and closing in on all time highs on the S&P 500. Since the S&P 500 is the real stock index, the failure to so far reach new all time highs is bearish divergence, but since the lag is small and we may see that index catch up and hit all time highs this week, it may not be significant. Basis the cash S&P 500, the all time high was set at 1576.09 on 11 October 2007. Friday’s close was 1560.7.

The Nikkei this week hit its highest level since September 2008 basis the daily continuation chart and remains the most profitable trade of the year to date for the LS Trader system. Since the trade was entered on 21st November 2012, we have banked 485 points profit from December contract, 2360 from the March rollover and currently have 320 points profit from the June contract for a total of 3165 spread betting points profit, making it a very profitable trade indeed.

Commodities

Gold and silver continue to drift sideways in a tight range as they have for the past couple of weeks. As we wrote last week, a critical support shelf is within range for both markets and that will be the critical level for both of these markets during the coming weeks. If support does hold then we may see a decent bounce higher, but a break of key support could open the door for a larger decline. The longer term trend remains down.

US Crude has continued with recent counter trend strength and has managed to push back above the 200 day moving average. The longer term trend remains down but resistance may be tested this week.

Orange juice had another bullish week, crossing 140 briefly before pulling back slightly into the close. A continuation towards 144.15, the December 2012 high may still follow. That level is critical resistance so if the market can get beyond that, we may see a decent move higher.

Coffee looks set to resume the long term downtrend and we have initial targets at 130 and may further out see a decline to around 123. Feeder cattle, which is another commodity that the LS Trader System is bearish on, may now continue the profitable downtrend towards major support at 136.16, the 2009 low. If support there can be taken out then we may see a very significant downtrend over the coming months.

Currencies

This past week saw quarterly currency expiration as the March contracts rolled forward to June. The week also saw dollar strength continue during the first half of the week, but then sold off on Thursday and Friday across the board.

The dollar index climbed to 8342, just 8 pips shy of our 8350 target but then sold off quite sharply during the past 2 trading days of the week. This for now is just counter trend weakness for the dollar and the longer term uptrend is still intact.

The Euro, which is almost an exact mirror image of the dollar index had fallen to its lowest level since December, but then recovered Thursday and Friday. The trend remains up for the Euro.

The British pound fell to its lowest level since June 2010 but then put in a fairly decent recovery in line with late dollar weakness seen elsewhere. The trend is still very much down for the Pound.

Interest rate futures

Interest rate futures have edged higher once more with the shorter term markets still leading the way. The 5 year T notes and 3 month Eurodollars remain in a long term uptrend but the trend is down for both the 10 year and the 30 year bond.

Good trading

Phil Seaton

Weekly Update 10th March 2013 – LS Trader

The past week has seen the Dow 30 reach a new all time high, completing the recovery from the March 2009 lows. Of import though is the fact that both the S&P 500 and Nasdaq 100 lag behind. Perhaps most interesting is the fact that the dollar has continued to rise along with stocks. Historically, stocks and the dollar are inversely correlated, so the fact that the dollar continues to rise as do stocks, bodes well for further dollar strength, a move that will likely accelerate once stocks start to correct.

Last week we wrote about the break of the downward sloping trendline on the dollar index that has held in place since 2002. This week marks the fifth anniversary of the major dollar index bottom at 70.70. Since then, in spite of huge amounts of stimulus and most commentators expecting inflation and the death of the dollar, the dollar has in fact risen 17%. Based on our analysis, the dollar still has much further to run to the upside.

This coming week sees quarterly stock and forex expiration as the March contracts roll forward to June.

Stocks

As mentioned above, the Dow 30 reached new all time highs this week but the S&P 500 failed to do so in spite of making new highs for the current move. The chart set-ups are obviously still bullish, but further strength will need to be confirmed by the S&P 500 also reaching all time highs. Until that happens, there is a good possibility of a reversal, but for now the trends are clearly up across the sector. Basis the cash S&P 500, the market still has 25 points to advance to the 2007 high.

The Nikkei remains the strongest of the indices that we trade at LS Trader based on the strength of the current move, and this week saw the index rise to its highest level since September 08. Having this week cleared resistance at 12200, the path is now clear for a continuation towards 14000. The Nikkei trade is currently the most profitable trade for the LS Trader system this year, with 2360 spread betting points profit just from the March contract alone. Add to that the 485 points that we banked from the December contract, and we have a total profit of 2845 spread betting points from a single trade since we entered back on the 21st November last year.

Commodities

Gold has drifted sideways in a tight range over the past week, suggesting that a bigger move is just ahead. The critical support shelf is within range and that will be the critical level for this market. If support holds that may lead to a rally higher, but if it fails, a sharp drop may follow. Silver has a similar set up.

US Crude did drop below $90 as we suggested may happen in last week’s update. The market has since rallied and is now testing the 200 day moving average, which may act as resistance. The trend is still down and our targets at $87 remain in place for now.

Orange juice held on to the 120 support area and climbed steadily until Friday’s sharp advance of 6.9% took juice to its highest level this year. The weekly advance of 10.09% is the largest weekly advance in months and keeps the uptrend intact. We may now see a continuation towards 144.15, the December 2012 high. That level is critical resistance.

Currencies

The dollar index completed a fifth straight week of advances and may now continue to the next resistance level around 8350.

The British pound continues to get whipped, this week perhaps critically, closing below $1.50. AS we have written in recent weeks, there is now little in the way of chart support to prevent a decline of several hundred more spread betting points. The pound has now closed lower in 10 of the past 12 weeks.

The USD/JPY took out the recent highs to resume the longer term uptrend. If last week’s highs can be taken out, the next target will be just north of 97 on the way back towards parity further out.

Interest rate futures

It’s been a bearish week for interest rate futures, all of which have ended the week lower by some considerable margin. The 30 year T-Bond printed a huge bearish reversal pattern which took the market to new lows for the current move. The other markets in the sector printed similar price moves but remain slightly stronger than the longer term bond.

Good trading

Phil Seaton

Weekly Update 3rd March 2013 – LS Trader

The LS Trader system has continued its strong start to the year in spite of an increasing level of volatility seen in several markets. There are however a handful of markets that continue to trend well, and these markets are generating more than enough profit to offset the volatile markets.

Two things occurred this week that are of particular interest. Their long term importance will only be known after several more weeks. The first factor came in a market that we don’t trade at LS Trader, but it is nevertheless a major market and one we keep an eye on, the Dow 30. On Monday, the Dow formed a key reversal day that completely engulfed the entire price range of the prior 20 days! I can’t recall a key reversal day engulfing that many prior days’ range, although much of those prior 20 days have seen relatively low volatility. Considering the extent of this reversal, it is perhaps surprising that the Dow recovered so quickly and went on to post new multi-year highs. In the space of just a few days, there is a strong argument for the bull and bear case for stock indices!

The second key event, which is also potentially significant, is the bullish break of a downward sloping trendline on the dollar index that has held in place since 2002. We have written in previous weeks that we expected the dollar to rally in the near term and this adds some fuel to the bullish dollar argument.

Stocks

The S&P 500 has followed a similar price course to the Dow mentioned above, apart from the fact that the key reversal was not so evident. The S&P 500 however has failed to recover to new highs, so that will be the focus point in the coming week.

The Nikkei remains the strongest of the indices that we trade at LS Trader, and this week closed at a new multi-year high. Last week we wrote that a move and close above 11570 would be bullish and that has so far been the case, with the March contract reaching 11715. This has been another extremely profitable trade for the LS Trader system, and it continues to run.

Commodities

Copper completed its change of trend to down as the metals sector continues to be under pressure. However, of perhaps major importance to this sector is the critical support shelf that is within range for both gold and silver.

Brent crude has continued sharply lower following the completion of an evening star pattern on the weekly charts that we wrote about last week. In fact, with the exception of natural gas, the entire sector has taken a bettering over the past 2 weeks. Heating oil in particular has continued its near vertical decline, crossing below the 200 day moving average. A change of trend to down is within range this week. US Light crude (we trade both Brent and US Crude at LS Trader) has also continued its recent weakness, also moving below the 200 day moving average. US Crude has for some time been in a long term downtrend according to LS Trader’s proprietary trend identification and may now head further south towards $87 basis the April contract should $90 support give way.

In last week’s update we wrote that May wheat looked set to trade below $7 a bushel for the first time since June last year, and that did happen. Wheat dipped as low as $6.975 before mounting a small recovery, but the trend is still bearish.

Currencies

The dollar index completed the breakout and change of trend that we suggest may happen last week.

The British pound continues its bear trend, taking out the prior week’s lows as expected. On a closing basis $1.50 is just about holding, but should the market close this week below $1.50, look out below. There is little in the way of chart support to prevent a decline of a further several hundred spread betting points in this market.

The LS Trader system finally exited USD/JPY following a large reversal day on Monday that brought the trend for now to an end. This has been an extremely profitable trade since we entered last year back on the 15th November at 8070 basis the December contract. This single trade banked as impressive 1131 spread betting points profit.

Interest rate futures

Short-term strength has continued in the interest rate futures sector, which appears to have bottomed out around 4 weeks ago, at least for the time being. The shorter term markets have once more been the most bullish in the sector which is as expected, since the shorter term markets never completed a change of trend to down according to LS Trader’s trend analysis. Both the 5-year T notes and 3 month Eurodollars, are within range of their recent highs.

Good trading

Phil Seaton

Weekly update 24th February – LS Trader

Following seven consecutive weekly advances, the S&P 500 finally had a down week, albeit a fairly small decline by Friday’s close. The dollar on the other hand has advanced against most of the majors and a new uptrend may be beginning. Dollar strength has pressured commodities and may continue to pressure stocks should the new uptrend get underway.

Stocks

As stated above, the S&P 500 ended the week lower for the first down week in 8. The market dipped below 1500 during the week but recovered on Friday. The weekly chart indicates indecision in this market and the current range remains tight. As we wrote last week, the market has been rising in agony over the past couple of weeks and does not look convincing and is very much susceptible to a correction, especially on a close below 1500.

The Dow, which as mentioned last week is not a market that we trade at LS Trader, found support at 13800 on the March contract and looks poised for a test of 14000 this week. As the Dow is holding up better than the S&P 500, the market’s reaction at 14000 may give a clue as to short term direction in other indices.

The Nikkei remains the strongest of the indices that we trade at LS Trader, and this week closed at its highest level for the current move at 11505. Last week we wrote about the range that has been in place over the past few weeks between 11000 and 11500, and give or take a few ticks, the market is still within that range. A move and close above last week’s high at 11570 would likely indicate a move higher.

The Nasdaq 100 continues to be the only stock index in a downtrend according to LS Trader’s proprietary trend algorithm, had 2 very bearish days mid-week, dipping below 2700 before recovering on Friday.

Commodities

Gold continued lower towards our target at 1550 and dragged silver lower to a confirmed change of trend to down as expected. The entire metals sector has been under pressure with a change of trend to down well within range for copper.

The energy sector has also been pressured lower with US light crude ending the week lower by 3.40%. Brent crude had a smaller decline but the move has been sufficient to bring the current uptrend to an end for now. Brent crude formed an evening star pattern on the weekly charts, which suggests weakness may continue and confirms resistance at the high of the past 3 weeks. No leaded gas and heating oil were also lower.

The grains markets have mostly continued with weakness. Wheat ended lower by 3.97% and looks set to trade below $7 a bushel for the first time since June last year

Currencies

The dollar has had a strong week, advancing well against the majors. This has put the dollar index right on the cusp of a breakout that would give a change of trend to up. Such a move, if confirmed would likely pressure commodities further and would also add to the bearish argument for stocks since commodities and stocks are historically inversely correlated with the dollar.

The British pound joins the Japanese yen as the whipping boys of the currency markets. This week’s sharp decline for the pound easily exceeded our target at $1.5350 (which many doubted when we first wrote about it several weeks ago) and may yet continue lower. If last week’s low can be taken out there is considerable room to the downside for an extended move lower during 2013.

Interest rate futures

Interest rate futures ended the week higher as the sector has continued the recovery following the lows formed 3 weeks ago. On the weekly charts, lower shadows are evident on the past weeks’ candles, indicating buyers coming in and supporting the markets. The trend remains up for the shorter term markets but is still down for the longer term markets.

Good trading

Phil Seaton

Weekly Update 17th February 2013 – LS Trader

Stocks continue to press higher with the S&P posting new 5 year highs once again and all time highs are still within range. Whether we see all time highs remains to be seen as the daily price action suggests that the markets are rising in agony.

The week ahead will be a shortened trading week due to Presidents’ Day on Monday in the U.S.

Stocks

The S&P 500 ended the week higher by 0.31%, with a new high weekly close for the current move as the market continues to stabilize above 1500. However, the daily price action is far from convincing and is very much a slow grind higher that looks susceptible to weakness at any time. The price range for the week was just 13 points, which is very narrow for this market and is a range that is unlikely to continue.

One factor that is possibly holding U.S. stocks down is the resistance that we mentioned in last week’s update for the Dow at 14000. This past week March Dow rose to 14004 but was unable to hold above 14000, closing the week back at 13948. The Dow 30 is not a market that we trade at LS Trader but it is a market that we monitor, especially around psychological levels, such as round numbers.

Last wee we wrote that we expected that the Nikkei would recover the losses seen during the prior week and that did happen, although once again resistance was found around 11500. The current range spans roughly 500 points between just above 11500 and just above 11000. Watch both levels for a breakout, with a subsequent move in the direction of the breakout likely.

Commodities

The general trend with few exceptions is bearish for commodities. Regular readers will know that our expectation at LS Trader is for a bear market in the grains sector to more than erase the 2012 bull market. This past week has seen price action commensurate with that view as the grains markets have resumed the downward trend. Based on LS Trader’s proprietary trend analysis, the only market from the grains sector in a long term uptrend is rough rice.

Gold this week broke out of its trading range to the downside, giving a confirmed change of trend. This move led to some heavy selling on Friday and we may now see further weakness that will likely drag silver lower for a change of trend as well.

Sugar is also trending nicely lower and is in the classic bear market formation of lower lows and lower highs. Our next downside target is the May 2011 lows at 17.01.

Coffee continues its bear market move, this week falling for a fourth consecutive week. This week’s decline of 2.77% continues a fairly impulsive decline since the failure of the May contract to clear 160. We have downside targets at 135.

Commodity bulls are really only getting any joy at present from the energy sector, particularly brent crude and no leaded gas. Heating oil is also in an uptrend but both U.S crude and natural gas are still in long term downtrends.

Currencies

The dollar index advanced for a second straight week as the dollar gained almost across the board. The long term trends in the currency sector are mixed. This past week saw the end of the euro uptrend, at least for the near term, although the longer term trend is still intact.

The British pound continues to crumble, this week dropping below $1.55 for the first time since July last year. We remain on target for a continuation lower towards $1.5350.

The Japanese yen continues to weaken and this week lost another 0.67% against the dollar, in spite of a bit of a recovery seen in the middle of the week. The long term trend continues to favour the dollar but there are signs that the current trend may be on the verge of taking a bit of a breather. Longer term this market still looks to have further to run. This has so far been a hugely profitable trend for the LS Trader system with already with 1302 spread betting points profit from this single trade alone, and the trade is still running.

Interest rate futures

Interest rate futures were lower across the board but the new long term downtrend is still yet to really get underway and still ideally needs confirmation with some weakness from the shorter term markets. The lows of the current move continue to attract buyers and selling is unlikely to take hold until those levels are taken out.

Good trading

Phil Seaton

LS Trader

LS Trader system update 10th February 2013

After a bit of a dip earlier in the week, the S&P 500 rose again to new 5 year highs and is now just a few percentage points off all time highs posted in 2007. U.S. markets overall remain strong, particularly the S&P 500. The Dow 30, which is not a market that we trade at LS Trader, but is still nonetheless a major index, is grappling with resistance at 14000. With all time highs just over a couple of hundred points away, strong resistance at present levels can be expected.

The long term trends are up for stocks, mixed for commodities and bonds, and mostly down for the dollar.

Stocks

Big selling hit the Dax on Monday, bringing the uptrend to an end, at least for the time being. The longer term trend however is still very much up and we may yet see new highs for the year, especially if U.S. and Asian stocks continue to advance.

The S&P 500 ended the week higher by 0.38%, with a new high weekly close for the current move as the market tries to stabilize above 1500. The weekly charts show a hanging man pattern, which is typically bearish, but also shows that any declines below 1500 are being short lived and met with new buying.

Of the 4 stock indices that we trade at LS Trader, only the Nasdaq 100 is in a long term downtrend. This is certainly a cautionary note for stock bulls as generally the most bullish advances for stocks are led by the Nasdaq, which currently is the laggard and is still almost 100 points of its recent multi-year high, whereas the S&P 500 is continually making new multi year highs. This is certainly some bearish divergence.

The Nikkei also hit new multi year highs during the past week but fell back on Thursday and Friday. These losses may well be recovered early next week.

Currently it seems that investors want out of bonds and into equities so all time highs for the S&P 500 in 2013 are a distinct possibility.

Commodities

It’s been a fairly indecisive week for the metals markets with gold and silver still remaining range bound. Even the leading two metals markets, copper and palladium lost ground this week. However, the trend is still up across the sector.

Brent Crude continues its recent good run, this week reaching its highest level since March last year, following an advance of 1.83% for the week. Gasoline and heating oil were also higher but US light crude, which along with natural gas is still in a long term downtrend, ended lower by 2.1%.

The grains sector overall has seen renewed weakness and the expected bear market decline that our proprietary trend analysis at LS Trader indicates may well be about to begin the next leg lower. Several of the grains markets are looking under pressure once more with only rough rice remaining in a long term uptrend.

Currencies

The dollar had a good week as indicated by the 1.49% weekly advance for the dollar index. The sharp drop in the Euro, which ended the week lower by 2.19%, influenced this dollar index advance. On the weekly chart, the Euro has printed a large bear sash pattern, which suggests strong resistance at the highs of the pattern at $1.3715.

The dollar reached our long term target at 9400 before pulling back to end the week almost flat, forming a doji star on the weekly charts. This is typically an indecision pattern and points to a pause in the current uptrend. As we have written several times over the past few weeks, a correction is due, especially following a 13 week advance.

Interest rate futures

Interest rate futures were mostly higher this week having earlier fallen to new lows for the current move before recovering those losses.

As we have written in recent weeks, when everyone is so bearish on a market or a sector, the move usually falls well short of expectation. Already after only a couple of weeks following the break of critical support have buyers come back in to the market, so it remains to be seen how much further the current move has to run to the downside. It may be that we have to wait a little longer before we see an extended move to the downside.

The long term trend is down for the 10 year T notes and 30 year T bond, but is still up for the shorter term markets. An extended move will not happen until the long term trends all align across the sector. This means weakness must enter the shorter term markets as well. So far this has not happened.

Good trading

Phil Seaton

Where can I find live charts for interest rates?

One of the questions we regularly get asked is “Where can I find Live Charts/Candlestick Charts for spread betting, in particular interest rates and bonds?”

Live charts for trading interest rates and bonds are important, as they are for all markets. It is important as any delays in data could result in losses or missed profit opportunities. However, the more successful traders will be adding stop losses to their trades as soon as they open them, and these stops will get triggered automatically should the markets rise or fall to the level of the stop. This negates the need for live data to a very large extent.

In addition, traders can also place orders to open trades, known as entry stops, so that should the market reach a preset level at any time, the spread betting company where you have placed your order will automatically fill your trade. This is a very effective way to trade as it removes the need to sit in front of the screen all day and removes the emotion from trading to a very large extent as orders can be placed at the beginning of the trading day or week, when the markets are closed. This is the way that the LS Trader system works.

Candlestick charts

The most popular type of chart for traders these days is the candlestick chart. It is considered to be the best because it graphically shows the highs and lows of various time intervals and is also more visually representative than the bar chart, even though it uses the same data to create the candle, namely the open, high, low and close.

The trader can tell at a glance as to whether the market is up or down on any timeframe by the colour of the candle for the session. If the close is above the open, the candle will generally be filled in green as that is an up day. If the close is below the open, the candle will generally be red as that is a down day. Other colour combinations can be seen, such as white for up days and black for down days. Another type is hollow candles for up days and filled candles for down days. They all mean the same thing, whichever colour scheme is used.

I mostly use candlecharts in my own trading as they are easier to look at and quickly convey more information about the security than bar charts. That said, there are some patterns that are unique to bar charts, so using both can be beneficial, especially if the trader is using some form of pattern recognition to make his trading decisions.

Live Charts on the internet offered by spread betting companies

Live charts can be found just about anywhere on the Internet. All spread betting companies have charts available for their clients. However, not all spread betting companies give access to live data for all markets, although these days most do.

IG Index is one company that offers live data access for charts, ETX Capital is another. Both of these spread betting companies offers a complete charting package with professional features. The live charts offered give traders the ability to adjust the charts to their own preferences and add their own preferred indicators. A trader can add over 70 indicators or create their own indicators. Traders also have the ability to draw directly onto the chart should they so wish.

Spread betting software and data packages

Live charts and candlestick charts are easy to find on the Internet. However, the best place to start is with your own spread betting provider as the charts will already be there and be free. The more serious trader can look to charting packages and market data from companies such as Thomson Reuters Metastock. They offer one of the best charting and data packages and I use both daily. Traders can choose between real time or end of day data depending on their preferences. End of day is suitable for most and is much cheaper. You can take advantage of a 30 day free trial of Metastock software here