LS Trader Weekly Update – Monday 23rd April 2012

The past week has seen stocks move slightly higher with the exception of the Nasdaq 100, which is still the only index to remain above the 50 day moving average.

The dollar reversed upon reaching key support and resistance areas and has therefore moved back to within the recent range against most of the majors with only a couple of exceptions. The trend is still therefore mixed for the forex markets as it is also for commodities. The long term trend is still very much up for stock indexes in spite of the recent short term correction.

Stocks

Stocks pushed higher with the exception of the Nasdaq 100, which is still the strongest of the indexes. The Nasdaq was the only one of the indexes that we trade that was still above the 50 day moving average, but that was tested this week and Friday’s low was pretty much dead on the l ine. If the 50 does give way this week there will be a test of support at 2650. Failure there would open the way to potentially a decline to the next support area around 2570.

The strongest of the indexes that we trade at LS Trader was the German Dax, which advanced by 2.5% for the week, forming a nice bullish engulfing pattern on the weekly chart. We may now see the Dax test short term resistance around 6800. The long term trend remains up.

As we wrote last week, a glance at the longer term weekly charts still shows how bullish the markets are and what we have seen so far is a relatively small correction and nothing as yet to become to alarmed about. The S&P 500 still has good support at a couple of support zones around 1350 and 1330. As long as those hold the longer trend will still be very much intact. Whether we run into the usual seasonal weakness as we get into May remains to be seen.

Commodities

Gold ended the week lower by 1.05% but appears undecided on near term direction as evidenced by the series of small real bodies on the daily charts. The market now site roughly mid way between support at 1613 and resistance at 1680. The market still remains below the 200 day moving average and the trend remains down.

Crude moved higher by 0.54% for the week and everything we wrote last week still holds true. To re-cap, we wrote: “There is still evidence of strong buying from just above the $101 level. It is likely that the $100-101 area will continue to provide good support and possibly lead to a move higher to next resistance around $106.”

The biggest daily move of the week once again came from the grains sector, where Soybean meal advanced 3.6% on Friday alone, advancing to its highest all time level and over the $400 per ton level for the first time since August last year.

Currencies

The dollar index failed to break through resistance and moved back to within the recent range. If anything the index looks more likely to test the lower end of the range next. This is largely influenced by the strong support seen for the Euro at exactly $1.30. We have been writing for the past few weeks about the importance of support at $1.30 for the Euro and that was last week’s low to the pip, at which point buyers returned once again. That makes the $1.30 level very critical, not just for the Euro, but for the dollar on the whole.The British Pound did however manage to break out of its range, giving a long term change of trend to up against the dollar.

Interest rate futures

Interest rate futures ended slightly higher but are showing signs that the momentum is waning. A series of small real bodies on the daily charts indicates some indecision and as they are appearing at resistance may indicate that these markets may push a bit lower in the short term. The long term trend is still up.

Good Trading

Phil Seaton

LS Trader Weekly Update – Monday 16th April 2012

The past week has seen stocks continue to head south, and all but the Nasdaq 100 are now below the 50 day moving average, so the short term trend is down. The long-term trend is still up however for all the stock indexes but further short term weakness may follow this week.

The dollar has remained mixed but may be setting up for a breakout to the upside. To an extent what happens in stocks will impact the dollar as the long term inverse relationship is still intact. The trends for commodities still remain mixed.

Stocks

Stocks declined for another week and as mentioned above, all but the Nasdaq 100 have moved below the 50 day MA. This is an area where we can normally expect some sort of support and the past 4 days action on the S&P 500 has been chopping above and below the average. The 1380 area, which had previously been providing short term support has now switched to resistance due to change of polarity and having recovered the week’s earlier losses the S&P 500 failed at that level and pushed lower. It is quite likely that we will see a test of last week’s lows again this week. However, the long-term trend is still very much up and if viewed from a longer term perspective, the correction seen is very small. A glance at the weekly chart of the Nasdaq 100 puts this very nicely into perspective, as the market had gone almost straight up from the middle of December.

As we have written many times before markets don’t go straight up or straight down and there are always corrections along the way. The question is, how long and how deep will the correction last? That remains to be seen and we’ll have to let the market tell us. On the S&P 500 a good support point is around 1330-1340 and that is an area that has a good chance of being tested. For now, this correction is counter t o the long-term trend so the best place to be is on the sidelines until we get some confirmation one way or the other. April is still seasonally a good month but that does run into seasonal weakness in May.

Commodities

Gold ended the week higher by 1.85% but had been higher until a reversal on Friday. The market still remains below the 200 day moving average and the key $1700 level.

Crude ended the week lower by 0.49% but there is still evidence of strong buying from just above the $101 level. In the past week alone there has been a hammer and a bullish engulfing pattern from the support area so there is clearly strong interest at those levels. It is likely then that the $100-101 area will continue to provide good support and possibly lead to a move higher to next resistance around $106. However, should the support give way it would likely lead to a move lower to around $97, approximatel y where the 200 day MA currently is and the next level of support.

Currencies

The dollar index moved back above the 50 day MA with a very bullish candle pattern on Friday and will likely test short-term resistance this week. A break of this resistance will likely lead to a resumption of the long-term uptrend and a move to at least 8116 and possibly the highs of the year further out. The opposite of the dollar index is the Euro, which once again looks to be declining to test key support around $1.30. A break of $1.30 would likely see a test of the February lows and failure there may open the way for a move further down towards $1.2640. The trend remains down.

Interest rate futures

Interest rate futures have continued to press higher this past week and are continuing their recovery since printing morning star revers al patterns around a month ago. This narrowly kept the long-term trend to up and since then the short term trend is also up. Whether we see a continuation higher to the highs of this year set back in February remains to be seen but that is looking like a good possibility at present.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 9th April 2012

The past week has seen stocks finally correct somewhat, something that has been on the cards for the past few weeks. However, the long term trend is still very much up across the stock indexes and each of the indexes we trade remain above their 50 day moving averages and still a long way above their 200 day MAs.

The dollar saw an end to its recent short term weakness as it ended the week higher against all the majors with the exception of the Japanese Yen. The long-term trends are still up for stocks but mixed for the dollar and commodities.

Stocks

The S&P 500 failed to make new highs this past week and has subsequently fallen back below the 1400 level. This suggests that in the short term a top has been put in at 1419.6 on the June futures contract, although Friday did see buyers return at the lows of the day at 137 3, taking the index back to close at 1390.2.

As has been the case for much of the recent rally, the Nasdaq 100 is still the strongest and is still holding up better than the other indexes and still remains above support. As long as that remains the case there has not been a huge change in sentiment and the other indexes could recover, but if the Nasdaq joins the breakdown then that may accelerate the down moves.

As we wrote last week, on a seasonal basis April is a good month but as ever price and trend is far more important than any seasonal indicator or tendency. Looking further ahead, the old adage often applied to stocks of “Sell in May and go away” is only a few weeks away and given the extent of the recent up moves for stocks, a reasonable correction is not out of the question.

Commodities

Last week we wrote “Gold ended the week higher by 0.42% but having had a brief look ab ove the 200 day moving average on Tuesday, where it ran into the $1700 level, ended back below the 200 day MA. The long-term trend is still down and conditions bearish as long as $1700 resistance holds.” $1700 did hold and the market remains in a long term downtrend and below the 200 day MA having fallen to new lows since the First week in January.

Crude ended the week higher by 0.28% and formed a doji on the weekly chart, which represents total indecision. In the longer term the trend is still up but the short term is without direction. Support from the psychological $100 level is still in place but if that level is taken out there is little in the way of support until the 200 day moving average, which currently sits around the $97 level.

Coffee did break though the $1.90 level that we wrote about last week but was unable to push higher and the trend is still down.

Currencies

The dollar index held on to the previous week’s lows on a closing basis (although the lows were briefly taken out intra-day on Tuesday) and this formed a platform for a decent push higher as the market remains above the February low and also above the 200 day MA. The long term trend is still up but the market is currently in the middle of the range that spans from the lows at 7842 and the local top at 8116 (June contract).

The British Pound fell just short of giving a confirmed change of trend to up and reversed this week to remain in the box range that has been in place for quite some time. The long term trend therefore remains down and the market is currently sitting almost exactly on the 200 day MA, which may provide some support.

The Euro was unable to clear $1.34 resistance and this failure led to a move down back towards $1.30, a level that will likely be tested this week. A break of $1.30 would likely see a test of the February lows and failure there may op en the way for a move further down towards $1.2640. The trend remains down.

Interest rate futures

The morning star reversal patterns that formed in the interest rate futures sector 3 weeks ago have proven to be a strong reversal, as they often are, and the 5 & 10 year T notes as well as the 30 year Bonds have continued to advance higher and the long term uptrend which narrowly stayed in place looks to be getting back on track. We may yet see a continuation higher towards the highs of the year.

However, as we wrote last week, should the market eventually break the low of the morning star pattern, which is now a key support area, there could be some large moves lower as such a move would not only break that pattern but also change the long term trend to down.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 2nd April 2012

The past week has seen stocks push on to new highs but then pull back slightly into the weekend. Nevertheless, stocks still ended up having their best first quarter in 14 years, with large gains being seen in the S&P 500, Nasdaq 100 and the Nikkei 225.

Elsewhere we have seen continued short-term weakness for the US dollar, which has continued to decline against most of the majors, but commodities have remained mixed. The long-term trends are still up for stocks but mixed for the dollar and commodities.

Stocks

The S&P 500 did manage another week of gains but did pull back in the latter part of the week having earlier hit new highs. The trend is still very much up and the index has just about managed to close north of the 1400 level. We wrote last week that a close back above 1400 would be bullish and that is what we have seen last week but the market has so far been unable to push on from there.

Typically, the start of new quarters and new months end up being bullish for the first couple of trading days so we may see another go at last week’s highs in the next few days. Additionally, there are some fairly long lower shadows on some of the daily candles and this indicates that the lows are being rejected and that buyers are still stepping in at the lows. On a seasonal basis April is a good month but as ever price and trend is far more important than any seasonal indicator or tendency.

Commodities

Gold ended the week higher by 0.42% but having had a brief look above the 200 day moving average on Tuesday, where it ran into the $1700 level, ended back below the 200 day MA. The long-term trend is still down and conditions bearish as long as $1700 resistance holds.

Crude has fallen to its lowest level in six weeks and has taken out the $104 level on a closing basis that has been acting as support recently. The long term trend is still up but aside for support from the psychological $100 level, there is little in the way of support until the 200 day moving average, which currently sits around the $97 level.

Coffee put in its first up week in eleven weeks but the trend is still clearly down, although a test of the $1.90 resistance area looks likely again in the near future.

Currencies

The dollar index ended the week lower for a third straight week and may continue further down. 7950 was taken out, as was the 7932 level that we wrote about last week so we may now see a test of the February low at 7842 (June contract).

The British Pound has continued with short-term strength and is now looking to break out of the box range that it has been in for the past couple of months to the upside and is now on the verge of a change of long-term trend to up.

Interest rate futures

Interest rate futures rose for the second straight week, continuing higher from the morning star reversal patterns that formed a couple of weeks ago, which continue to provide support. The long-term trend is still up across the sector, and with the expectation increasing that “Helicopter Ben” will start the printing press running again with more QE3 in the not too distant future, yields may continue their recent decline, sending prices higher once more.

However, should the market eventually break the low of the morning star pattern, which is now a key support area, there could be some large moves lower.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 26th March 2012

The past week has seen stocks continue to stall, following on from the loss of momentum seen the week earlier. Of the 4 stock indexes that we trade at LS Trader, only the Nasdaq ended the week ahead and this week saw the Nasdaq 100 hit a new 11 year high.

Last week we wrote “Contrary to popular opinion, doji are not reversal signals in and of themselves but more an indication that the bullishness has lost a bit of momentum and are often just the markets pausing for breath before continuing higher. That said, they do present a possible warning for the short term.” As mentioned above, these doji have so far translated into some small short term weakness and there are now similar formations on the Nasdaq 100 daily chart.

Stocks

The warnings that we wrote about for stocks and the S&P 500 last week did lead to a down week but not by much. The S&P 500 retreated 0.31% for the week but the spinning top that has formed on the weekly charts could once again be a further potential warning of more weakness ahead in the short term. However, the trends, both long and short term are still up and these factors are more important than the loss of momentum until there is confirmation of a down move, which as yet we do not have. The 1400 level was taken out but the market has been unable to make a weekly close above that leve so far. A weekly close above 1400 would be bullish.

We wrote last week that a correction was due on the Dax and we did see that with a weekly decline of 2.12%. As with the other indexes though the trend is still up and as long as short term support holds (on a closing basis the 7000 level is still holding) then the upside target at 7680 is still in play.

Commodities

Gold ended the week below the 200 day moving average once again but buyers did come back in at $1627 and the market may now continue higher to test the 200 day MA. The trend however remains down.

Continuing its major downtrend is Coffee, which this week completed a 10th consecutive down week. There was a semblance of buying on Friday but the trend is still clearly down.From the energy sector, the only gainer was No Leaded Gas, which pushed through resistance intra day to reach its highest level since July 08. However, there was a bit of profit taking on Friday, which has taken the market down to close right on a support level from prior highs. If the trend is good the prior highs should provide support and lead to a continuation higher, otherwise we may see some short term weakness.

Currencies

The dollar index ended the week lower for a second straight week and may continue further down. 7950 did get taken out in tra day but held on a closing basis. A close below 7950, or more precisely last week’s low at 7932 would be bearish short term and would likely lead to a test of the February low at 7842.

Interest rate futures

We wrote last week “There are many hedge funds that are itching to short interest rate futures so if last week’s lows do get taken out we could see further selling pressure. For now though the long term trends are still up.” The prior week’s lows did hold, albeit only just, but this did lead to a formation of quite a strong reversal on a couple of the markets, a morning doji star formed on both the 5 & 10 year T notes. The morning doji star is quite a strong reversal pattern so short term strength may continue. However, this makes the low of the pattern a very key support point and if support there fails there could be some large moves lower.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 19th March 2012

The past week has been another bullish week for stocks but the initial bullishness did wear off a bit by the end of the week, as evidenced by the smaller bodied candles/northern dojis. Contrary to popular opinion, dojis are not reversal signals in and of themselves but more an indication that the bullishness has lost a bit of momentum and are often just the markets pausing for breath before continuing higher. That said, they do present a possible warning for the short term.

Bullishness in stocks has translated as it often does to dollar weakness, and although the dollar began the week in quite a strong fashion that developed into weakness by the end of the week. Therefore is the same old story with the trends being up for stocks and mixed for the dollar and commodities.

Stocks

As covered in the introduction, stocks have continued in bullish fashion but some warnings are present in the short term that a possible loss of momentum is upon us. Not really surprising considering the extent of recent moves higher and the fact that the June S&P 500 is now banging its head against the 1400 level.

The other indexes also look good in spite of similar hesitation patterns forming as the Dax advanced 3.85% for the week. The 2011 high at 7680 will be a longer term upside target now that the Dax appears to have firmly closed above 7000. However, a correction is due and we may see some weakness before that target is reached, if indeed it is in this current uptrend.

Commodities

Soybeans have continued their bull run, this week advancing by 2.76%. The upside target remains at 1450 for beans and this past week has also seen bean oil and meal following along nicely, with meal being the most bullish of the sector.

Gold ended the week down by 3.25% and continues the long-term downtrend. This past week saw the yellow metal move once again below the often watched 200 day moving average. Copper fared better, advancing by 0.51% for the week and still remains in a long term uptrend with a test of 40000 being the critical level.

Currencies

The dollar index ended the week lower by 0.51% having earlier made an upside breakout that eventually reversed. The trend for the index is still up as it is for the dollar against a few of the major currencies.

The Aussie dollar fell to a 7 week low against the dollar but then made a recovery, forming a nice hammer pattern on the weekly chart and we also saw a similar pattern of trading for the kiwi. The Canadian dollar continues to be the weakest of the 3 commodity currencies and is still in a long term downtrend whereas the trend for the other 2 is still up.

In spite of a bit of a pause from weakness towards the tail end of the week, the Yen continues to be the whipping boy of the currency markets, having declined for a seventh straight week, this past week declining by a further 1.01%. Resistance has appeared at 8400 but if that can be cleared then our target at 8500 is still on the cards.

Both the Euro and the Pound advanced for the week against the dollar but the trend is still down for both markets.

Interest rate futures

We wrote last week “We may see some decent moves lower should those support levels eventually give way”. We were referring to the medium term support levels that have held the interest rate futures markets up very well of late. This week those support levels were tested and support failed, leading to quite a dramatic sell off, which in the case of the 30 year T Bonds, this mean a weekly decline of 2.76%. There are many h edge funds that are itching to short interest rate futures so if last week’s lows do get taken out we could see further selling pressure. For now though the long term trends are still up.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 12th March 2012

The past week has been quite a volatile one with some large moves seen in stocks, commodities and currencies. Much of the losses incurred by these declines were almost completely erased by the end of the week and some markets made a complete recovery and actually ended the week higher.

Long-term trends are still up for stocks and still mixed for the dollar and commodities.

Stocks

We wrote last week that momentum on the S&P 500 may be running out of steam and right on cue weakness came in to the market, taking the market out of the recent bull channel and bring to an end the recent rally. The correction was however short lived and the S&P 500 made almost a complete recovery by the end of the week and is now only a few points off recent highs.

The Nasdaq 100 was not immune to early weakness but it did make a complete recovery and even went on to make new highs, albeit narrowly, and completed a tenth straight week of gains. However, in spite of making new highs and a new high close it’s not all bullish for the Nasdaq as there is a formation of a dragonly doji/hanging man pattern on the weekly charts, which is a bearish sign for the short term. It would not therefore be surprising to see a new test of last week’s lows in the not too distant future.

Commodities

April Crude moved around a bit during the week but did end up with an advance of 0.66%. Upside resistance is in at the local top at $110.55 but if the market can reach and clear that we would be looking at a further rise towards last year’s highs at $114.

Soybeans continued in bullish fashion until Friday where we saw some weakness. It’s been a very strong move of late so some selling pressure is not all that unusual and an further rise towards 1450 is still a possibility but we may see some further weakness in the short term prior to that.

Metals all ended the week lower but the whole sector had been significantly lower earlier in the week and the weekly charts show long lower shadows on many of the metal charts, which is bullish. The trend remains mixed for metals with the long term trends being up for some but still down for gold. Gold is currently grappling with the 200 day moving average but a move above 1800 will be required for a confirmed change of trend to up.

Currencies

The dollar index advanced for the second consecutive week, this time gaining 0.78%. This move was once again facilitated by advances against the ended the Euro, Pound and Japanese yen. We wrote last week that we were still looking for a move higher to 8200 in the USD/JPY and that should that level be taken out that 8500 would come into focus a nd that is the case now since 8200 resistance was cleared on Friday.

Respective resistance levels at $1.35 and $1.60 for the Euro and the Pound continue to look like a short term top and the failure to take out those levels has pressured both markets lower and downside breakouts look to be on the cards for both markets, with a $1.52 target for the Pound and $1.27 for the Euro.

Interest rate futures

Interest rate futures all ended the week lower but all continue to hold on to medium term support. The 5 year note formed a hammer pattern at support, which is a bullish reversal pattern, indicating buyers are trying to hammer out a bottom and push prices higher once again. As we wrote last week, we may see some decent moves lower should those support levels eventually give way but for now a continuation towards the higher end of the recent ranges looks more likely.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 5th March 2012

The past week has seen stock indexes continue to climb higher but there are signs that momentum may be beginning to wane. The dollar has also advanced for the week overall and commodities have been mixed. With a few exceptions volatility is at much lower levels than it has been for much of the past 2-3 years and many markets are trending well.

Long-term trends are up for stocks and mixed for the dollar and for commodities.

Stocks

The S&P 500 advanced by 0.40% for the week and the trend is clearly still up. However, there are signs that the momentum may be running out of steam. The bull channel that we have been writing about for several weeks is just about holding on a closing basis but the market is right on that lower trendline as of Friday’s close. If the lower level holds then we may yet see a move back towards t he top of the channel and the 1385 target.

The Nasdaq 100 continues to lead the way as far as the indexes are concerned with this past week being the ninth straight up week, for a weekly gain of 1.61%. The weekly chart still looks bullish but the daily charts are showing some indecision with a northern doji printed on Friday.

Commodities

April Crude cleared $110 on Thursday before pulling back on Friday but the trend remains up and it was a similar story for heating oil and no leaded gas. The trend remains up for all three markets at present but it remains to be seen as to whether last week’s weakness translates to a stronger pull back. Last week’s highs in all three markets will be the resistance levels that will need to be cleared.

Last week we wrote about the indecision that was present in gold and that was clearly resolved this past week with a steep sell off on Wednesday, whi ch took the market easily through he $1765 support area. The long term trend remains down but last week’s lows may provide support, as may the 200 day moving average which currently sits at $1765. Silver ended up sharply lower also on Wednesday but the trend still remains up.

Soybeans had a very bullish week, moving ahead 3.59% for the week for a third consecutive week of gains. The soybeans chart still looks bullish with little in the way of resistance between current levels and the September highs around 1450.

Currencies

The dollar index ended the week higher by 1.35% helped mainly by gains against the Euro, Pound and Japanese yen. We wrote last week that we were looking for a move higher to 8200 in the USD/JPY pairing and that level was almost reached this last week. If that resistance level can be cleared there is little in the charts by way of resistance until around the 8500 level.

Both the Euro and the Pound made sharp reversals lower having been rejected at $1.35 and $1.61 respectively. The long-term trend remains down for both of these currencies and lower prices may be ahead.

Interest rate futures

Interest rate futures continue to hold on to medium term support and both the 5 & 10 year notes advanced but the longer term 30 year bonds ended slightly lower. The long-term trend is still up across the sector and these markets must still be considered bullish as long as medium term support holds. We may however see some decent moves lower should those support levels eventually give way but for now a continuation towards the higher end of the recent ranges looks more likely.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 27th February 2012

The past week has seen stock indexes continue to climb higher, in some cases to new multi-year highs. We have also on balance seen the dollar continue recent weakness and commodities advance.

Long-term trends are up for stocks and are heading that way for commodities. The trend for the dollar is up on balance but may be changing soon.

Stocks

Friday’s high on the S&P 500 was the highest level seen since May 2008 and as we wrote last week this gives us our next target at 1385. We wrote a couple of week’s ago about the importance of the lower support from the bull channel holding and it did again this week, bouncing directly off it on Thursday before pushing to new highs. just about this week, and new highs for the year followed.

The Dax hit another new high since August and ended the week ahead by 0.37%. As was the case with the S&P 500 and with the prior week, the Dax continues to find support from the trendline that has held since December last year. Each decline towards the trendline is being met with buying.

The trend for stock indexes remains up across the board and we may yet see new highs, especially if these markets remain in the bull channels. However, although the Dow and Nasdaq 100 have cleared their 2008 highs, the S&P 500 has not and as we have written many times before, the S&P 500 is the most important of the indexes so the 1385 level will be an important level to watch as failure there will likely put the brakes on the other indexes.

Commodities

Crude oil remains in a highly bullish trend and looks to be heading towards last year’s highs around $114. The current chart shows no sign as yet of a reversal and there is nothing in the chart to suggest that the market won’ t reach that level, aside from the fact that the market is possibly a little overextended in the short term. The weekly advance for Crude was an impressive 5.96%. No leaded gas and heating oil are also on a bullish run and are following crude higher.

Gold advanced 2.93% for the week, forming a bullish candle on the weekly charts but that does not perhaps tell the full story as the last 3 trading days of the week were spinning tops and Friday was a down day. This is why the Japanese Candlestick traders counselled against using candles on weekly charts, and only using daily charts, as much of the message can be lost on a weekly chart. That said, the recent highs around $1765 may now provide some support due to change of polarity where prior resistance becomes support.

Currencies

The dollar index ended the week lower by 1.33% and now looks to be heading lower to the 7800 level and the 200 d ay moving average. For now the long term trend is up overall for the dollar but with much more continued weakness that may change soon.

The British Pound continues to trade within the box range between $1.56 and $1.59. A break of either level may give rise to a decent move but for now the trend is down. For the box range to continue, resistance around $1.59 needs to hold to send the pound lower again. The Pound had a good week against the Yen, giving a confirmed change of trend to up for the first time since July last year.

For the second week running one of the big moves of the week was in USD/JPY, with a 1.93% gain for the dollar. This has taken the dollar back above the 8000 level, which suggests a continuation higher towards 8200.

Interest rate futures

Interest rate futures headed lower and tested medium term support as expected, which held once again, leaving futures slightly ahead for the week. The long-term trend still remains up for the sector.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 20th February 2012

The past week has seen stocks reach and move above our long-standing target of 1355 on the S&P 500 and U.S. stocks have now all but erased their losses since June 2008. The trend remains up for stocks with indexes either at or near multi year highs (the Dow 30 hit a 4 year highs this past week and the Nasdaq 100 reached its highest level since 2001).

Considering the above the dollar has held up quite well and with the exception of against the Australian and New Zealand dollars, still remains in a long term uptrend.

Stocks

For the past several weeks we have been writing about our 1355 target on the March S&P 500 and it was finally reached and cleared this week and we now have new targets at 1385. We wrote last week about the importance of the lower support from the bull channel holding and it did just about this w eek, and new highs for the year followed.

The Dax also moved higher, reaching its highest level since August and continues to find support from the trendline that has held since December last year. Each decline towards the trendline is being met with buying and this week was no exception as Thursday’s lows bounced exactly off this trendline, propelling the market to new highs on Friday. This week also saw a change of long term trend to up for the Nikkei, so the trend is now up across the board for all the indexes we trade at LS Trader.

Commodities

Last week we wrote on Crude “The market remains above the 200 day moving average and the trend is still up so an upside breakout remains more likely” and we did see a breakout to the upside. April Crude reached its highest level since September last year and the trend remains up. Heating oil and No leaded gas followed Crude higher and gasoline is now moving towards last year’s highs and we may see those levels tested this week.

We have a third consecutive doji on the weekly chart on Gold so indecision in this market is very much the current status. Buyers are so far coming in just above $1700 but if that level fails we may see a move lower towards the 200 day moving average and support around $1650. The long-term trend still remains down and resistance is still in place at $1770 on the April contract.

Currencies

The dollar index ended the week higher by 0.29% and does appear to have formed some decent short-term support around 7850 with support provided by the stick sandwich pattern and the bullish engulfing pattern that we wrote about last week. The long-term trend remains up for the dollar overall but is down against the Aussie and New Zealand dollars.

The British Pound did not quite make it as far down as $1.56 and t he 50 day moving average but did make quite a strong recovery on Thursday and Friday. Resistance is still in place at the 200 day moving average around $1.59 and that may be tested this week.

Big move of the week came as the Yen declined against the dollar by 2.41% for the week, a move that saw the dollar push above the 200 day moving average for the first time since April last year. More significant than that though was the break above the highs formed on the 31st October last year. The trend is now up for the USD/JPY.

Interest rate futures

Interest rate futures ended the week lower and the uptrend may be coming to an end, at least for the near term. Longer term markets are holding up slightly better than the shorter-term markets and medium term support is still holding. Those support levels may be tested this week.

Kind Regards

Robert Stewart