Weekly Update 3 September 2017 – LS Trader

Monday is the Labour Day Holiday in the US so the week ahead will be a shortened trading week. The past week was a very active week as multiple markets broke out from trading ranges. This resulted in the LS Trader System entering 14 trades this week, which is far more than average. This is further indication that the markets are awakening from a long period of random rotational sideways trading action. This is likely to continue to be the case as US Traders and fund managers return to their trading desks this week following the summer break. Exciting times ahead!

Stocks

The Nasdaq 100 made a new all-time high on Friday as well as an all-time weekly closing high. Of some concern to the bulls is the doji printed on Friday and the close slightly back below prior resistance. However, the RSI has moved back above the 60 level again, and the trend is unmistakably still up. All time highs are not a bearish characteristic

The S&P 500 lags the Nasdaq 100 but has recovered most of its recent declines with this four-day rally that commenced from just above support. The RSI has ended the week bang on the 60 level, so there are two key hurdles for the market to clear this week.

The Dax is the first and only stock index to complete a change of trend to down so far. However, the break below support was fleeting, and a sharp reversal and rally followed. The market has closed right on fair value, so the week ahead will likely determine whether the market is going to continue its recovery or turn lower from between current levels and the 50-day moving average, which is currently 116 points above Friday’s close.

Commodities

There were several large moves in the commodities markets this week as the energy markets, particularly RBOB Gasoline soared higher, gaining 13.44% for the week in spite of a 1.76% decline on Friday. Heating Oil saw a similar, but not quite so impressive advance.

Metals have also seen some decent moves. Gold completed the upside breakout this week, moving decisively above the double top around 1300 and the long-term downtrend from the July 2011 all-time high. The next target is 1403. Copper continues to grind higher towards our target of 330. Palladium shot higher on Friday with a big 4.81% move and continues to work towards all-time highs at 1090 later this year.

Currencies

The dollar has had a mixed week. The Dollar Index fell to new lows for the current move before reversing higher but remains below resistance. The Euro saw similar, but inverted price action. Thursday and Friday both saw dips back to fair value, but that level is likely to be tested again this week if new dollar strength persists.

Recent dollar weakness has not been evident against the New Zealand Dollar, where dollar strength has set up a head and shoulders top pattern. The neckline was briefly broken last week, and price also dipped below the 200-day MA on Thursday. A break below last week’s lows, particulate on a closing basis would see the pattern and a change of trend to down complete, giving a downside target of 6829.

Interest rate futures

Interest rate futures broke out to the upside on Tuesday but have so far been unable to hold the breakout. The RSI broke above the 60 level but has also dipped back below that key level. This keeps the uptrends under pressure in the near term, but the long-term trend remains up across the board.

Good trading

Phil Seaton

LS Trader

Weekly Update 27 August 2017 – LS Trader

It’s been a reasonably quiet week in the markets which is to be expected as we come towards the end of light summer trading. Monday is a Bank Holiday in the UK, and the following Monday (4th September) is the Labour Day Holiday in the US. This should, therefore, be the last week of low volume trading as traders return to their desks on the 5th September.

Stocks

The S&P 500 fell to new lows since the 11th July on Monday but found support, printing a 4-bar morning reversal pattern, which will now be key short-term support. The rally seen this week has taken the market back to closing right on the 50-day moving average, with price roughly in the middle of the range of the past three months. Last week’s low and further below that the 2395 levels look to be the key support points and the market must be viewed as bullish above those levels. The Nasdaq 100 shows a very similar setup, with key short-term support at 5752.5. 5560 looks to be the critical support level at present.

In spite of recent weakness, it should not be forgotten that price in both US markets is still very close to new all-time highs. Also to be considered is the historical weakness that is often seen in September, which is still the biggest losing month in percentage terms since 1950. One way or the other, the recent low volatility period is likely to come to an end over the next month or so.

Commodities

Copper has had a bullish week and printed a very bullish candle on the weekly chart which also took prices to their highest level since November 2014. Volatility is elevated on the weekly chart where we have seen seven consecutive up weeks. Friday’s doji suggests indecision, so we may see some sideways/corrective action early next week, but the long-term trend remains intact with targets at 330 later this year.

Palladium made another new high print since March 2001 this week and continued to move higher, although the price action this week has been a little less convincing with most of this week’s candles having small real bodies. This suggests that the market may be getting a little tired and there is divergence between price and RSI. However, the long-term trend remains, and we continue to look for further rally towards all-time highs (1090) later this year.

Currencies

The Euro rallied to a new high late on Friday before dipping back to close below resistance. The Dollar Index also had a nibble at recent support on Friday but was unable to break through. The long-term trend remains down for the dollar and the week ahead could be interesting. Volatility in the dollar index has fallen to very low levels so a sizeable move could be on the horizon.

Interest rate futures

Interest rate futures continue to edge higher. We wrote in last week’s update that a decisive move above 60 on the RSI would likely lead to an upside breakout. The RSI continues to hug the 60 level and has yet to decisively clear it, but price action suggests that it might. There’s a decent probability of upside breakouts this week above the June highs and a resumption of the long-term uptrend. The surge in volume on Friday was due to the September contract rolling forward to December.

Good trading

Phil Seaton

LS Trader

Weekly Update 20 August 2017 – LS Trader

Stock indexes have seen mixed but volatile trade this week, but continue to display short-term weakness against the long-term uptrend which remains intact for now. The dollar has seen a bounce over the past two weeks, but that may have run its course. Price action in Gold has been very interesting and will be one to watch this week, as discussed below.

Stocks

Stocks have had a volatile week. Having found support at the prior week’s lows, the S&P 500 rallied through to Wednesday’s high before turning lower again, moving back below the 50-day moving average and the previous week’s low. This has seen the RSI drop below the 40 level, which is bull market support, and the uptrend is now under pressure.

The Nasdaq 100 has seen similar price action but held above the prior week’s low, and the RSI also held bull market support at 40, meaning that, for now, the Nasdaq is slightly healthier. However, a breach of 5761 would likely lead to a break of 40 on the RSI and may lead to further weakness back to medium-term support at 5560.

The Dax managed to hang on to support and quickly got back above its 200-day MA, almost reaching the 50-day MA before turning lower again. This index continues to look weak and is likely to be the first index to complete a change of long-term trend to down.

Commodities

Gold rallied to resistance to the tick, basis the back-adjusted continuous contract, matching the 1306.90 high that was printed on the 17th April. On the non-back-adjusted contract, Friday’s high exceeded the June and April highs mentioned last week on an intraday basis, but then quickly reversed, forming a falling off the roof pattern with a shooting star on the daily chart. This is ugly price action in the short-term and suggests that the market may move lower again next week. However, if Friday’s high can be taken out, that would be a bullish breakout to the upside. Therefore, Gold is at a key inflection point and price action early this week should be telling.

Copper and Palladium continue to lead the way higher for the metals. Copper cleared the 295.50 resistance level mentioned last week, printing a new high for the move at 298.25, before falling back and closing below prior resistance. However, price action still looks bullish, and the RSI remains above the 60 level.

Palladium made new highs again for the current move and took out the 913 resistance level to reach its highest level since March 2001. As we wrote last week, we now could see further rally towards all-time highs (1090) later this year.

Currencies

The dollar pushed higher against most of the majors this week, bringing the last two remaining currency trades we had open to an end. This resulted in the LS Trader system banking 696 pips profit from our long EUR/USD trade, where we had been long since 25th April. This was the second most profitable trade of the year to date. We also banked 211 pips profit from our short Dollar Index trade, where we had been short since the 28th June.

This counter-trend dollar rally now has us flat the currency markets, but that may not remain the case for long as several currencies are within range of breaking out again. Of particular interest is the Japanese Yen, where a range has been in place for all of 2017 to date. A successful breakout to the upside (Yen strength/dollar weakness) could be worth around 500 pips and could see the Yen head up towards parity against the dollar over the coming months.

Interest rate futures

Interest rate futures are gradually grinding higher. The 30 Year T-Bond continues to find resistance right at the 60-level on the RSI and therefore remains in the bear range. A decisive breakout above 60 would likely lead to a test of the June high and a possible breakout.

The shorter end of the yield curve has seen similar price action but is slightly more bullish, and a breakout could be seen this week, especially if stock market weakness persists. The long-term trend remains up for the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update 13 August 2017 – LS Trader

The past week saw the expected weakness in stocks and a continuation of the counter trend rally in the dollar against most of the majors. For now, the long-term trend remains up for stocks, although some short-term technical damage has been done. The long-term downtrend remains intact for the dollar in spite of the recent bounce.

Stocks

From last week: “August has been the worst month of the year for the S&P 500 since 1988 and given the extent of the recent rally and lack of volume and volatility; a correction is well overdue.”

We saw a big move down in stocks on Thursday this week as short-term support was broken. This continues weakness in the stock indexes since the outside-downside day on the 27th July where the Nasdaq 100 printed new all-time highs. This is not good price action to be coupled with new all-time highs. Price action has been similar in both the S&P 500 and the Nasdaq, and the break of support brings the uptrend to an end for the short-term, but the long-term picture and trend remain bullish, for now.

The Dax has been weaker still and is the weakest of the four stock indexes we trade at LS Trader. Price this week fell to and found support at the 200-day moving average. The RSI fell back below the 40-level, which is bull market support, and the RSI is therefore now in the bear range. A close below last week’s low would be bearish and suggest a change of long-term trend to down was imminent.

Commodities

Strength has been seen this week in the metals markets. Gold began the week lower but bounced right off its 200-day AM and rallied higher towards resistance around the $1300 level. Gold has broken the downward sloping trend line from the 2011 all-time high this week. A breakout above the April and June highs in Gold could be seen soon, and the bullish case is building. Silver remains weaker than Gold but also rallied. However, resistance has been found at the 200-day MA, and the trend for Silver is still down.

The stronger of the two metals markets, and the two that the LS Trader system currently has long positions in are Copper and Palladium. Copper rallied to its highest level since May 2015 but has run into resistance at the 295.50 level. Palladium reached its highest level since September 2014, but multi-year resistance at 913 continues to hold firm. If that level can be decisively broken, we could see further rally towards all-time highs (1090) later this year.

The energy markets continue to grapple with the 200-day MA as sideways trade continues and there is nothing doing in the energy markets at present.

Currencies

The dollar gained against most of the majors but was lower against the Euro. The dollar index also ended the week lower having earlier tested resistance. We could see the Dollar Index test the recent low. It should be noted that this week’s close on the Dollar Index is the lowest weekly close since April. The 91.36 low printed in the first week of May basis the back-adjusted continuation charge is a major support zone which will likely be vigourosuly defended. If that level is broken, then we could see longer-term declines towards the 86 level.

Interest rate futures

Interest rate futures displayed some strength this week to close higher for the second consecutive week, but Friday’s indecision bar on the Long Bond keeps these markets range bound for now. However, the shorter-term markets are closing in on a test of resistance, and we could see a breakout in the 5 Year T-note as early as Monday. The long-term trend remains up across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update 6 Aug 2017 – LS Trader

The dollar has regained some of its recent declines against the majors following an extended period of dollar weakness that has resulted in high volatility readings in several current markets, including the dollar index and the Euro.

Stocks have pulled back since the latest all-time highs printed on the 27th July and are trading in a narrow range just above short-term support.

The long-term trends remain unchanged and are still up for stocks and interest rate futures, down for the dollar, where a corrective rally is expected, and mixed for commodities.

Stocks

Both the S&P 500 and the Nasdaq 100 failed to make new all-time highs this week, and both are undergoing volatility compression and are trading in a narrow range. August has been the worst month of the year for the S&P 500 since 1988 and given the extent of the recent rally and lack of volume and volatility; a correction is well overdue. However, the long-term trend is unquestionably up, and the market remains above short-term support.

The Dax found support at last week’s lows and pushed higher on Friday as the Euro declined. The index remains between its 50 and 200-day moving averages and may recover further if Euro weakness persists. For now, the long-term trend remains up, but this index remains the most likely of the four we trade at LS Trader to complete a trend change to down.

Commodities

The rally in the energy markets since the lows printed back in late June appears to have paused, with resistance found at the 200-day MA. The RSI has moved above the 60 level but has been unable to push on decisively. Therefore, with the long-term trend remaining down, there is considerable resistance at Monday’s highs and the 200-day MA.

Natural Gas remains the weakest by far of the energy sector, and Friday’s low was the lowest print for NG since early March.

Gold’s rally ran out of steam this week with the market unable to clear the $1280 level. Some weakness has been seen in all the metals as Copper, Palladium and Silver have also pulled back. With the exception of Silver, the long-term trend remains up for the metals.

Currencies

The dollar’s weakness may have run its course for now as we have seen the dollar gain almost across the board this week. The Euro reached its highest level since January 2015 but has seen a fairly aggressive pullback since the high on Wednesday. This has resulted in a bearish shooting star on the weekly chart as well as extreme high volatility readings on the daily and weekly charts.

The dollar index has, of course, done the opposite, and also has extreme volatility readings at daily and weekly level. This suggests that we can expect further dollar rally over the next week or so as we get some mean reversion against the primary trend.

Interest rate futures

Interest rate futures continue to undergo volatility compression and remain range-bound. The long-term trend remains up for all markets in the sector, but a breakout above the July highs is required before these markets will be of any interest.

Good trading

Phil Seaton

LS Trader

Weekly Update 30 July 2017 – LS Trader

U.S. stock indexes made new all-time highs yet again and the U.S. dollar continues to weaken almost across the board. Interest rate futures are in a random rotational two-way trading environment and may remain so for a few weeks yet. Commodities remain mixed, with metals and energies both having good weeks and continuing their recent recoveries.

Stocks

The S&P 500 rose to new all-time highs again this week but continues to trade in a narrow range in what is still a low volatility environment in spite of the large bar by recent standards printed on Thursday.

The Nasdaq 100 also printed a new all-time high on Thursday but fell just shy of the 6000 level. A sharp drop followed the high, but the lows were rejected on Thursday and Friday, which keeps the uptrend intact.

The Dax, which remains the weakest of the four indexes that we trade at LS Trader, decline further this week and is now well below its 50-day moving average and heading towards a test of its 200-day MA and quite possibly a change of trend to down over the coming week or so.

Commodities

From last week: “Gold had a decent week, keeping the long-term uptrend intact. Volatility is expanding, and price may continue higher towards 1300 level over the coming week or so.” Gold advanced again this week, reaching a high of 1277. The RSI has broken cleanly above the 60 level and looks set to continue higher to test the double top around the $1300 level.

Also from last week: “Copper reached its highest level since early March and could be poised to complete a trend change to up if it can successfully breakout from a five-month consolidation.” Copper completed a nice breakout and change of trend to up, reaching its highest level since May 2015 in the process.

Currencies

From last week on the dollar index: ”The dollar index fell to its lowest level since June 2016 and could be heading lower for a test of major support at 91.88. Volatility is expanding to fairly elevated levels so we may be nearing the point of a correction, but the long-term trend remains firmly down.” The index fell to new lows for the current move again, but volatility is reaching very elevated levels, currently at its highest levels since September 2014

The Euro, which is the inverse of the dollar index, continues to move towards our target at the 200-week MA (currently at 1.1844). Volatility is naturally elevated at these levels, but as with the dollar index, that does not mean that a reversal is imminent. Some cooling off and a correction towards fair value could be seen in both markets, but the trends are well established and intact.

Interest rate futures

Interest rate futures continue to consolidate around their 50 and 200-day MAs, both of which are nearly flat, and the RSI is also moving sideways in the region of the 50 level. Add to these declining volume and volatility, and it’s evident that this sector is in a sideways chop that is best avoided until resolved.

Good trading

Phil Seaton

LS Trader

Weekly Update 23 July 17 – LS Trader

U.S. stocks made new all-time highs again this week, and the dollar continues to weaken across the board. Interest rate futures continue their recent recovery and remain in long-term uptrends. Commodity markets remain mixed for the most part as they continue to build up for the next major move.

Stocks

Both the Nasdaq 100 and the S&P 500 hit new all-time highs this week, and both made new all-time weekly high closes. Price action has not been convincing following the breakout and volatility, and volume remains subdued.

The Dax fell to its lowest level in four months and this week’s low fell within the large gap printed back in April. Price is now decisively below its 50-day MA and may head lower towards its 200-day MA, currently at 11906. The Dax is the weakest of the four indexes we trade at LS Trader and may complete a change of trend to down over the coming weeks.

Commodities

Gold had a decent week, keeping the long-term uptrend intact. Volatility is expanding, and price may continue higher towards 1300 level over the coming week or so.

Copper reached its highest level since early March and could be poised to complete a trend change to up if it can successfully breakout from a five-month consolidation.

The energy markets reached their highest levels in six weeks but the breakout was rejected, and prices moved lower into the week’s close. The long-term trend remains down and a breakout to the downside to resume the downtrend remains on the cards.

The grain markets have seen increased volatility in recent weeks, and that appears to be the new norm. This is a good thing as it will result in some large trends over the coming months. Oats remains the strongest of the grains markets at present and the highs printed at the start of July could be tested this week. A successful breakout would firm up our longer range target of 350.

Currencies

The dollar index fell to its lowest level since June 2016 and could be heading lower for a test of major support at 91.88. Volatility is expanding to fairly elevated levels so we may be nearing the point of a correction, but the long-term trend remains firmly down.

From last week on the Euro: “Further strength this week could see an additional rally towards the area of the 200-week MA, over the coming weeks.” The Euro continued its advance and may test the 200-week MA (currently at 1.1844) this week as the dollar continues to weaken across the board. The Euro matched its 2015 high to the pip this week, and a breakout here could open the way to a few hundred more pips. Long Euro/USD is currently our most profitable open position, with 703 pips profit since we went long back on the 25th April.

The Australian dollar tested the 8000 level but has so far been unable to break through. Our target at 8400 remains in place. The other two commodity based currencies are also doing well.

The British Pound posted another new high since September last year but fell back before a slight recovery on Friday.

Interest rate futures

Interest rate futures continue their recovery following the correction that began late last month. Price has moved decisively above both the 50 and 200-day MAs, and the RSI is testing the 60 level. If we see a decisive move above 60 on the RSI, we may see a test of the local top in these markets, printed during the last week of June. The long-term trend remains up across the sector.

Good trading

Phil Seaton

LS Trader

Weekly Update 16 July 2017 – LS Trader

U.S. stocks have recovered this week as the S&P 500 printed a new all-time high. The Dow 30 also made new all-time highs. The Nasdaq 100 has also rallied to within range of new all-time highs and could complete the treble this week. Other global stock markets continue to lag.

Stocks

From last week on the S&P 500: “The RSI is also finding support above the 40-level and therefore remains in the bull range, and the long-term trend remains up.” The S&P 500 completed its recovery to push to a new all-time high and new all-time high close on Friday.

The Nasdaq 100 currently lags the S&P 500 and failed to print a new all-time high this week. However, price is now close enough to the local top to suggest that may happen this week. The RSI closed at 59.99, just a tick below the 60 level, a decisive break of which would be bullish. Volatility has also started to increase, but volume remains subdued.

Commodities

Silver’s collapse and recovery on the 7th July may turn out to be a blow-off bottom, but prices have yet to exceed the high of that bar and reenter the prior trading range. If they do, the downtrend is likely to be over or on hold. If resistance can hold firm at these levels, then lower prices may follow.

Silver’s recovery has seen similar price action with Gold, which has held just above key long-term trend defining support. A move below $1200 would be bearish, especially on a closing basis. The RSI remains bearish for Gold and volatility has contracted during the 5-day rally, suggesting that the rally is weak.

The grain markets underwent as substantial correction this week, largely due to a change in the weather from hot and dry, to unexpected thunderstorms. There is an old saying from the Chicago Board of Trade (CBOT) that ‘Rain makes grain’. Prices did recover some of the declines on Friday, and the trend remains up.

Currencies

The Euro crossed the 1.1500 level for the first time this year, and possibly significantly, closed the week above it basis the September contract. Further strength this week could see additional rally towards the area of the 200-week MA, over the coming weeks.

The Australian dollar decisively broke out of a rectangle that has been in place since April 2016. The upside target is in the vicinity of the 8400 level. The Canadian dollar continues to rally against the US dollar and rose this week to its highest level since September last year. The weakest of the commodity based currencies, the New Zealand dollar, still managed to reach a 6-month high.

The British Pound continues to shrug off Brexit and a huge amount of political uncertainty and has rallied to its highest level since September last year. There are a couple of technical patterns that suggest there is further to run, which generate targets between 1.33 and 1.3450. The RSI has cleared the 60 level, closing at a bullish 64.49, and price is also above prior resistance, as well as both the 200 and 50-day MAs. With the long-term trend remaining up, the technical picture continues to support the Pound.

Interest rate futures

Interest rate futures continue to consolidate in the area of the 200 and 50-day MAs. The long-term trend remains up for the sector, but price action is currently neutral.

Good trading

Phil Seaton

LS Trader

Weekly Update 9 July 2017 – LS Trader

The past week was a shortened trading week due to the Independence Day holiday in the US on Tuesday. Trading volumes have been fairly light as expected. The big moves have come in the current markets where we have seen considerable strength in the grains markets and weakness in metals and energies.

Stocks

The S&P 500 closed below the trend line that we referred to last week but continues to find support at the 50-day moving average. The RSI is also finding support above the 40-level and therefore remains in the bull range, and the long-term trend remains up.

The Nasdaq 100 ended the week flat but has now closed for six straight sessions below the 50-day MA. Price movements in the Dax are very similar to the Nasdaq 100, where price remains between the 50 and 200-day MAs.

The Nikkei, which has been the stronger of the indexes inasmuch that it has held up better than other global indexes also succumbed to weakness this week by breaking short-term support. Support has so far been found at the 50-day MA.

For now, the long-term trend remains up for all global indexes that we trade at LS Trader.

Commodities

From last week: “Price is now below the third fan of a 3-fan principle set up which may lead to a decline all the way back to the ‘V’ bottom printed back in December, at $1133 basis the back-adjusted continuous contract, in other words, around $110 below current levels.” Gold continued to decline this week as expected and is on the cusp of a change of long-term trend to down. The RSI has moved decisively into the bear range.

Silver also declined this week, which included a spike move lower on Friday which saw a sharp drop to 1434, before a recovery to close at 1542.5, down 7.22% for the week. The long-term trend remains down for Silver.

The energy markets ran out of steam in the vicinity of their 50-day MAs, and have turned lower again. The prospect of new lows remains in place.

The grains markets have seen some very large moves and volatile price swings. Wheat rallied from 463.5 two weeks ago to 574.5 on Wednesday before falling back to close the week at 535. The Soybeans complex has also seen bullish trade, as the grains complex continues to build a bottom.

Currencies

The currency markets continue to be mixed. The long-term trend on balance remains down for the dollar. The Dollar Index itself is trading just above its lowest levels in a year, having closed the week up by 0.39%.

The Euro dipped in midweek but recovered by the end of the week, but so far remains unable to cross the 1.15 level, which markets a considerable resistance zone. If resistance can be decisively broken, we could see further strength towards the area of the 200-week MA, currently at 1.1849.

The Canadian dollar continues to rally against the US dollar and rose this week to its highest level since September last year.

Interest rate futures

Interest rate futures have seen persistent weakness for the past two weeks. The long bond has this week fallen and closed below its 50 and 200-day MAs, and the RSI has also fallen through bull market support at the 40 level. These are not bullish characteristics, at least in the neat term, and price finds itself back to the middle of the range that has been in place since December last year.

The UK Long Gilt has seen sufficient weakness to bring a change of long-term trend to down within range, and we could see a change of trend completed over the coming week or so.

Good trading

Phil Seaton

LS Trader

Weekly Update 2 July 2017 – LS Trader

Stock indexes have seen an increase in volatility, and we are seeing some daily price swings that are inconsistent with price action that has been seen in the last couple of years. This suggests that the personality of the stock markets is changing and that we are on the cusp of seeing a volatility explosion from the narrow trading range conditions that have dominated the markets recently.

This week will be a shortened trading week due to the US Independence Day holiday on the 4th July, which also sees markets closing early on Monday.

Stocks

As mentioned above, there has been a shift in personality in the stock indexes this week, and this includes the S&P 500. Three well above average bars were printed in succession on the daily chart, the last of which penetrated the trend line that has been in place from the November 2016 low and the 50-day MA. However, both of these were reversed and held on a closing basis. We may see a further increase in volatility and further declines if both of these are decisively broken on a closing basis. However, with the long-term trends still being clearly up for global stock indexes, it’s still possible that last week’s dip was a bear trap. Time will tell.

From last week; “The Dax continues to undergo significant volatility compression, and support and the 50-day MA look likely to be tested soon.” The Dax broke support and closed below its 50-day MA for the first time since early December last year. Volume and volatility have both expanded along with the decline, which suggests further weakness ahead.

The Nikkei came within 5 points of its high from earlier in June but pulled back to support, and almost to its 50-day MA. The trend remains up for the Nikkei, which is holding up better than other indexes.

Commodities

Commodities have had, on balance, a pretty bullish week. The grains markets, in particular, have seen considerable strength, as have the energy markets, which have reversed some of their recent declines.

Not all commodities have been bullish. The metals have seen mixed trading and some weakness in Gold, Palladium and Silver. Gold is now back below its 50 and 200-day MAs and is trading just above short-term support. Price is now below the third fan of a 3-fan principle set up which may lead to a decline all the way back to the ‘V’ bottom printed back in December, at $1133 basis the back-adjusted continuous contract, in other words, around $110 below current levels. Copper is the exception in the metals markets, making a 3-month high on Friday.

Currencies

From last week on the Dollar Index: “The trend remains down for the Index, and the rally was unable to take the RSI anywhere near the 60 level. The RSI, therefore, remains in the bear range and we may see further weakness back towards last week’s low.” Weakness continued this week for the dollar, and the index fell to new lows for the move, down to its lowest level since October last year.

The Euro rallied to its highest level since August last year but is currently finding resistance at those levels as there are multiple resistance levels in the zone.

The British Pound has continued its recovery and has now rallied over 400 pips from the June 21st low, which keeps the long-term uptrend intact and has the Pound back to testing this year’s high.

Interest rate futures

Interest rate futures made new highs for the current move before reversing sharply. The 30-year T-Bond fell back exactly to its 50-day MA, and not far above its 200-day MA. Volume has also increased during the decline, but the long-term trend is still up for now.

Good trading

Phil Seaton

LS Trader