Weekly Update 11 June 2017 – LS Trader

The General Election result delivered a shock to the UK and the British Pound, but the result was quickly brushed off by the FTSE 100. The FTSE had gapped lower at the open but printed a strong bullish reversal and ended the day higher by 0.97%. Much of this recovery is likely due to the prospect of a weaker pound benefiting equities.

The UK was not the only country that saw a large move as the Nasdaq 100 reversed sharply lower having hit slight new highs earlier in the day. The trend for global stocks remains up.

Stocks

Tech stocks took a battering on Friday, and a large one-day key reversal bar was printed on the chart, accompanied by a near 370% increase in volume. Such a move may mark the top in tech stocks as it will take a significant move to reverse Friday’s sell-off which occurred on very high volume, thereby leaving a significant bearish footprint on the chart. From the bullish perspective, Friday’s close remained above the prior high printed on the 16th May, so technically we still have higher highs and higher lows. The long-term trend is up.

The S&P 500 also had a fairly volatile day but not to the same scale as the Nasdaq 100. The S&P 500 printed a doji, having been both higher and lower during the day but closing the day almost flat, down by 0.08%. The Nikkei also moved lower and closed the week back slightly below the 20,000 level at 19,960 basis the September contract. Quarterly stock index futures rolled to the September contract on Friday.

Commodities

Gold tested the $1300 resistance level and the trend line from the 2011 all-time high but did not close above it. The intraday breakout seen on Friday occurred on significantly lower volume, and prices quickly broke back below the trendline. That price action was not a valid breakout, and the failure could even be argued as being bearish, not bullish. Price needs to cross and ideally close above $1300 to confirm the breakout.

Palladium, on the other hand, did continue higher after the successful breakout the week prior and experienced a volatile day on Friday where prices shot up to 891.35 before falling back to lose at 856.20, but still higher for the day and the week.

Currencies

The British Pound was the big mover in the currency markets as the General Election shocked the markets. The British Pound gapped lower by over 200 pips on Friday morning as the election outcome put the UK into turmoil. This price gap took the pound back below its 50, and 200-day moving averages and price dropped below the 40 level on the RSI. However, the long-term trend, for now, is still up. Friday’s candle is known as a long-legged doji, a pattern which represents total indecision, which is very apt for the UK political scene!

The weakness in the pound did not filter through into other currencies. Even the Euro held up much better and remains above support and in a long-term uptrend.

The dollar index fell to new lows the current move in the middle of the week but recovered slightly to end the week higher. The trend remains down.

Interest rate futures

Interest rate futures pushed to slight new highs for the week before closing marginally lower. The uptrend remains intact for now, but prices are only just above support levels.

Good trading

Phil Seaton

LS Trader

Leave a Reply

Your email address will not be published. Required fields are marked *