The dollar has gained ground this week and may be on the verge of resuming its long-term uptrend. Stocks and energies may both be coming to the end of their corrective rallies and may resume their long-term downtrend soon.
The RSI cleared the 60 level on the S&P 500, but price made no progress for the week as the market closed flat. Both the Dax and the Nikkei have been weaker than their US counterparts, and these two indices look likely to make downside breakout ahead of the Nasdaq 100 and S&P 500, but decent-sized moves will be required.
The long-term trend remains down for global stock indexes.
Crude Oil turned lower from price and RSI resistance. Bear market resistance at the 60 level is evident on the daily chart of Crude. The long-term trend remains down, and prices may start heading lower towards the December lows soon.
Natural Gas completed a change of long-term trend to down as expected, following a breakout to new lows for the move.
The metals markets were mostly lower this week but remain in a long-term uptrend, except for Copper. Copper, however, has broken the 60 level on the RSI this week and could complete a change of long-term trend to up in the coming weeks.
Dollar strength looks as though it is resuming. The Dollar Index has closed higher in 6 of the last seven trading days. The RSI is testing the 60 level. If we see a decisive move above 60, we may see a rally higher to test the mid-December high.
The Euro looks set to test support once again and could break to new lows for the year. This would indicate, that if the January EUR/USD effect is to be correct this year, that the high of 1.1632 made on the 10th January will be the high of the year.
Interest rate futures
Interest rate futures look poised for new breakouts to the upside and a resumption of the long-term uptrend. The RSI has closed just above the 60 level on the 30 Year T-Bond and remains in the bull range. Strength is evident across the sector, with the short-term three month Eurodollar futures also likely to breakout this week.
The 3month Eurodollar could be one of the big moving markets this year as many get caught on the wrong side of interest rate expectations. Many continue to expect higher rates, but the COT positioning and other factors suggest that will be wrong and that interest rates will reverse and move lower, not higher (note, futures prices move inversely to rates).
The UK Long Gilt made its all-time high weekly close on Friday, and we could see a breakout to new highs this week. As with the US, interest rates look set to be headed lower, not higher.