LS Trader Weekly Update – Monday 28th June 2011

Stocks managed to rise over the past week albeit in fairly volatile fashion. Early weakness was followed by a mid-week move higher and then weakness to close out the week. Commodities for the most part were lower and the dollar moved higher.

The long term trends are mostly down now for stock indexes, mixed for commodities but still down for the dollar.

Stocks

For the second straight week we have a doji pattern on the weekly S&P 500 chart, which represents indecision. The S&P 500 had moved higher in the week but cam back to close just above the lows of the week. The long term trend remains up for the S&P 500, as it also does for the German Dax, but all the other indexes that we trade at LS Trader are now in a long term downtrend.

As we wrote in last week’s update, the prior week’s lows on the S&P 50 0 September contract may provide some support but if they are taken out then the next target will be the March lows, which currently sit at 1248.5 on the September contract. To the upside there is resistance at 1295.

The Nasdaq 100, Nikkei 225 and Hang Seng all managed gains for the week but the trend remains down and these markets may yet resume the downtrend. 9800 should provide some resistance for the Nikkei, with support around 9300. A break of either of these 2 levels could lead to some movement. Having failed to continue up through 2256, the Nasdaq 100 may target the 2175 support area.

Commodities

We wrote last week about the long term trendline that had been providing support for Gold that was at $1520 as well as further support at 1511 and wrote that a breach of those support levels may lead to a decline towards $1460. Gold did fall through those 2 levels and briefly pierced $150 0 before closing just north of $1500 at $1500.9. Further weakness may be seen this coming week.

Crude ended the week lower by 2.45% but is so far finding support at $90. A break of support here will likely bring further declines to at least $85 with the next support at around $83.50.

There has been general commodity weakness over the past couple of weeks with only a couple of exceptions. Orange Juice has been particularly strong and Sugar has also made a major recovery from the recent steep sell-off. Sugar is still currently in a long term downtrend but that may change soon if short term strength continues sufficiently. Other markets that have seen some renewed strength of late include the agricultural cattle markets. These still remain in a long term downtrend for now.

Currencies

The dollar index pushed higher again in the short term and the focus will still be on the resistance level at 7700. For now the long term trend remains down but this may change over the coming weeks if the dollar continues to rally.

The British Pound in particular is looking weak and may be heading for a test of major support possibly as soon as this week against the US dollar. The pound has also been weak against the Yen. The US dollar has also been gaining strength against the Canadian dollar, which may continue to rise towards parity. The US dollar has not been at parity against the Canadian dollar since March.

Interest rate futures

The long term trend remains bullish across the interest rate futures sector with prices hitting new highs for the year and yields falling to their lowest levels of the year. The longer term 30 year bond is still lagging behind their 2010 highs and it remains to be seen if the longer term market can continue higher to test those highs.

Kind Regards
Robert Stewar

LS Trader Weekly Update – Monday 13th June 2011

Stocks have continued their recent short-term weakness and indexes have been lower across the board this past week. The dollar has also had another bounce higher particularly in the last 3 days of last week. Long term trends are still intact although that may change soon for stocks if we get much further weakness. For now the trends are up for stocks, down for the dollar and commodities remain mixed.

Stocks

As we have been writing of late, the S&P 500 continues to form lower highs and lower lows, which is a bear market set up. The past week was also the sixth straight week of declines. Last week we wrote “We may now see a continuation lower to test 1290. If support there gives way then there is little to stop a decline all the way to the March lows around 1240.” 1290 support was tested and did give way so the March lows wil l be the next downside target.

We also wrote last week about seasonal weakness and that the Nasdaq may decline towards 2250. The declines ended up being steeper than that and the index sailed through 2250, reaching 2217.8 and may now head for the next support area at 2200.

Commodities

Gold moved to $1555 early in the week but has since pulled back to 1529. The long-term trendline that has been supporting Gold is still holding and may provide some support around $1500. We may yet see a continuation higher to test all time highs at $1577.7 on the August contract but that to an extent may depend on what happens to the dollar.

August Crude closed narrowly below the $100 level at $99.85 but is forming an interesting short term pattern with tightening price action. A breakout from this pattern may lead to a decent move in the direction of the breakout.

The daily charts still show a large number of long lower shadows on the daily candles showing support for the market is still in place. These lower levels may be tested this week though. More major support is in around $95.

Currencies

The dollar index had a good bounce during the later half of the week and did not fall as far as the March lows as yet, and last week’s gains brought and end to the prior 3 week losing streak. The long term trend is still very much against the dollar but we may see a bounce higher in the short term. Support for the dollar index is at last week’s lows at just under 7400 and further down at the March lows but bulls (not that there are many at present for the dollar) will be targeting the 7700 area. Sentiment is down to only 6% bullish and may yet fall further towards 3-4% bullish but with the vast majority being bearish another bounce higher may well be on the cards in the not too distant futu re.

As continues to be the case for the past few weeks, both the Swiss Franc and the New Zealand dollar continue to fare better than the other major currencies and both of these markets hit all time highs again this week.

Ben Bernanke this week indicated that there would not be a further round of easing, known as QE3 but if economic data continues to come out as bad as it has of late some further form of easing seems likely.

Interest rate futures

Interest rate futures continue their gradually climb, ending the week marginally higher. Yields remain near their lows of the year and prices stay near their highest level since November. The long-term trend remains up across the sector.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 6th June 2011

The dollar’s recent bounce looks to be over at least for now and long-term weakness is back on track with the dollar being lower against most of the major currencies. Stocks also continue to look weak but the long term trends are still intact and these are currently up for stocks, mixed for commodities and down for the dollar.

Stocks

The S&P 500 began the week well, including a break above the downward sloping trend line that we wrote about last week but then Wednesday saw major selling and this took the market back below the trendline and even below 1300. This was a fifth straight down week for the S&P 500. We wrote last week that the market is forming lower highs and lower lows, which is a bear market set up and that trend has continued this week with stocks beginning to look bearish. We may now see a continuation lower to test 1290. If support there gives way then there is little to stop a decline all the way to the March lows around 1240.

As we also wrote last week, we are now into a seasonally weak period for stocks and June brings an end to the best 8 months of the year for the Nasdaq. So far that seasonal weakness is playing out and we may see the Nasdaq decline further towards 2250.

The long-term trend remains up for all of the indexes that we trade at LS Trader with the exception of the Nikkei, which continues to be the weakest of the indexes and the most likely to give a sell signal.

Commodities

The long-term trendline that has been supporting Gold is still holding and currently dissects the market at around $1500. The past week has seen Gold hit $1550 again and reach its highest level in 4 weeks with the long-term trend remaining up and bullish. If the market can push up above $1550 there is little in the chart to suggest that the market won’t continue higher to test all time highs, currently at $1577.7 on the August contract.

Considering the weakness of the dollar, one would probably expect Crude to be faring better than it currently is. Friday saw the August contract close narrowly above $100. As before, a glance at the daily charts shows a large number of long lower shadows on the daily candles over the past few weeks and this continues to show that support is in for the market around the $96 level. If the market were eventually to break below that level it could lead to strong selling bit for now the trend remains up.

Currencies

A third straight week of declines has been seen for the dollar index and we may now see a move lower to test the March lows. The dollar normally enjoys safe have status and an inverse relationship with stocks so recent stock index declines should in theory have benefited the dollar. However, we have been writing here for quite some time that the dollar is enjoying less of a safe haven status than it used to, primarily because of the increasing awareness of the extreme flaws of the current reserve currency, a status that may be under serious threat over the coming years.

With US debt levels soaring out of control and the US heading for the debt limit threshold they will either have to default on their loans or continue to debase their currency as they have for the past few years. With Friday’s job number coming in well below expectation, QE3 is very much on the cards and this would spell further dollar weakness.

As we have been writing recently, both the Swiss Franc and the New Zealand dollar continue to fare better than the other major currencies with both of these markets hitting all time highs this week. It would appear to be only a matter of time before the other major currencies join the party and resume their long-term up-trends. The only likely spanner in the works for this scenario will be further weakness for stocks, which may lead to some dollar buying.This week is quarterly forex expiration so the June contract rolls forward to September.

Interest rate futures

Interest rate futures continue to climb gradually as yields continue to fall to new lows for the year, leading prices to their highest level since November. The November highs will be the next target for this sector. The long-term trend remains up across the sector.

Kind Regards

Robert Stewart

LS Trader Weekly Update – Monday 30th May 2011

The week ahead is a shortened trading week due to the Bank Holiday in the UK and the Memorial Day Holiday in the US. The coming week promises to be an interesting one as there are a couple of key levels to be tested that could lead to a reaction one way or the other. The dollar has resumed long term weakness and this has been to the benefit of commodities.

Stocks

Typically the 2 days following Memorial Day are quite bullish for stocks. The S&P 500 is heading for fourth test of downward sloping trendline from the highs on the 2nd May. Sloping trendlines are not as reliable as horizontal ones but this is an interesting short-term pattern. If The S&P 500 can break above the trendline then it may continue higher towards the May 2nd highs. Conversely, another failure to break the trendline may lead to aggressive selling. Currently the market is forming lower highs and lower lows, which is a bear market set up but a break above the trendline will break that.

We are however now entering into a seasonally weak period for stocks. June brings an end to the best 8 months of the year for the Nasdaq.

The weakest of the indexes is still the Nikkei and this index remains the most likely to break down first. Last week saw a decline into the support zone between 9335 and 9400 but the lower end of support has so far held firm.

Commodities

The long term trendline that has been supporting Gold of late continues to hold and still applies to the August contract, which we rolled into last week. Gold also pushed through short term resistance at $1526.80 that we wrote about last week and may now continue towards recent all time highs.

Crude continues to hold support around $95 and closed above the $100 level on the August contract after a gain of 0.68% for the week. The long lower shadows on the bottom of several of the daily candles are still in evidence and are also present on the weekly candles. This continues to show that the lower are being rejected and that buyers are returning to the markets at the lower levels just above $95. The long term trend remains up.

Currencies

The recent rally for the dollar appears to have fizzled out, at least for now and the past week saw the dollar index decline.

initially continued higher, moving above 7600 for a second time but once again being unable to stay above that level. If the index can regain and close above 7600 the next target will be resistance from the shooting star pattern formed on 1st April.

We wrote last week that the Swiss Franc and the New Zealand dollar had been holding up better than the other currencies as this continued to be the case over that past week. The Franc continued its recent long-term uptrend against the dollar hit new all time highs on Friday while the New Zealand dollar also continued its recent bullrun and cleared the highs of the year at 8100.

Interest rate futures

The Interest rate futures sector continues to be bullish with yields falling to new lows for the year and prices hitting new highs. The long-term trend remains up across the sector.

Kind Regards

Robert Stewart

Do Spread Betting Strategies Really Minimise Losses

Spread betting is a risky type of financial investing and one in which great losses may occur. However, utilising proven spread betting strategies can help minimise losses. There are many spread betting strategies which really can help investors earn more profits than potentially suffer losses.

Spread betting strategies are many and vary with the financial instrument being traded. One strategy which is possible on almost all trades is the execution of a stop loss. A stop loss outlines a total loss a trader is willing to lose on a particular trade and when that loss has been reached, the trade automatically closes.

A guaranteed stop loss is another of many spread betting strategies which helps minimise losses and works in the same way as a stop loss. The major difference is the stop loss takes some time to close out the bet and therefore a small amount of additional capital may be lost. There is no waiting time with the guaranteed stop loss and so the loss limit is guaranteed.

Other spread betting strategies include outlining the trades planned for each day and adhering to this plan. Spread betting strategies can prove beneficial to minimising one’s losses which can help all traders but especially novice traders.

Financial Spread Betting Is Not Executed on the Stock Market

Many UK residents have discovered the world of spread betting and it has made many citizens significant profits. Financial spread betting is a type of spread betting which focuses on the financial instruments found on the stock exchanges. These financial instruments include bonds, stocks, commodities, indices, and forex markets. Although these instruments are involved in spread betting, financial spread betting doesn’t really take part on the stock exchange.

Spread betting firms offer spreads on individual markets, and financial spread betting involves a bet being placed on this spread. No purchase of an instrument ever takes place and it is normally on the stock exchange where one would execute these purchases. Instead in financial spread betting, a trader will contact the spread betting company and place a wager on the spread. The trader will determine which direction the price of the financial instrument will move and make an appropriate buy or sell bet.

All aspects of financial spread betting are handled through the spread betting firm because no instruments are really being purchased. The spread betting firm takes the money wagered, collects losses as necessary, and deposits any profits. Therefore, in financial spread betting a trader is dealing only with the spread betting firm.

Fixed Odds Betting is a Popular Type of Financial Betting

There are three different types of financial betting for investors to participate in and the most popular of which is fixed odds betting. Fixed odds betting is the wagering of a financial instrument against odds created by a bookmaker or on a betting exchange.

In this type of financial betting, the odds are presented normally in fractional odds with the first number representing how much one could win in relation to the second number, the stake size. A fractional odd of 4/1 means a trader stands to make £400 for a wager of £100. Traders who make wagers on fixed odds are awarded the winnings plus their initial stake.

Fixed odds financial betting can be found regularly in betting on sporting events. The bookmaker presents odds on a variety of sporting events which traders then place wagers. Financial betting such as this type has been around for years even before the Internet was invented. Fixed odds is such a popular type of financial betting because of its history among sporting fans.

Financial betting is a type of gambling event which is regulated by the gaming commission and therefore many traders participate in fixed odds investing.

How are Profits Calculated in Spread Betting?

Spread betting can make people large profits with only a small amount of capital wagered. That is because profits in spread betting are calculated by the point movement of the spread times the stake size. The more correct a trader is the more profits. Likewise, the more incorrect one is the greater capital lost.

In spread betting a bet is made on a spread of numbers. A trader may buy or sell the spread for a stake size of one’s choice. A trader places a spread betting buy bet on the spread 23-25 for a stake size of £2. The closing market price ends up being 35, a ten point difference, and is multiplied by the wager and the total profits are £20.

These spread betting profits could have been greater if the trader had staked £5 per point which would have resulted in £50. Another way the profits could have been greater was if the point movement had been more than 10 points. A 20 point movement would have resulted £40 in profits.

Calculating profits in spread betting is will give an approximate value if the bet is in the trader’s favour; however one can never predict the accuracy of the bet.