Stocks saw considerable weakness during the week, followed by a strong recovery to retrace most of the week’s declines. This has left a strong hammer-like pattern on the weekly chart. It is not a hammer because the trend is wrong. There was not enough downtrend for it to be a reversal pattern, and, in terms of strict definition, the lower shadow was too long. However, the long-term trend remains up for the Nasdaq 100 and the S&P 500.
The trend is also still up for the Dax, but a change of trend to down is within range and could be completed in the coming weeks if we see additional weakness. The weakest of the stock indices is still the Nikkei, which never completed a change of trend to up when the other indices did. The Nikkei, therefore, remains in a downtrend.
Gold advanced another 3.82% to reach its highest level since 2013. Silver also rallied and crossed above the 1700 level for the first time in 14 months. Except for Copper, the metals remain in strong uptrends.
The British Pound made a new low print since January 2017, narrowly holding to the 1.20 level. The trend is down and may continue further, but sentiment is near a bearish extreme, with only 12% bulls, and, more importantly, record commercial buying. This week’s COT data shows that commercials now have their biggest net long position in history. Commercials are nearly always right at extremes, but often early. When this market turns, the move to the upside could be explosive.
Interest rate futures
Interest rate futures exploded higher again this week. The 30-year T-Bond made its highest print in almost three years, as the long-term uptrend remains intact. UK Long Gilts rallied to a new all-time high.