The past week has seen bullish price action in US stocks, led higher by the Nasdaq 100 which made a new all-time weekly closing high on Friday. That is not a bearish characteristic.
Multiple other markets have continued to consolidate as they digest the recent spike in volatility. The long-term trends remain as before, up for stocks, mixed to up for commodities, and down for the dollar and interest rate futures.
From last week: “The Nasdaq remains the strongest of the stock indices and new highs are still a possibility and could be seen this week.” As expected, the Nasdaq 100 rallied to new all-time highs this week. Perhaps of significant importance is that fact that the breakout occurred on Friday, with a close above the breakout level.
As we have been saying for years, the most important price of the week is Friday’s close, as that is the price that traders are willing to hold their positions over the weekend. It carries even more importance in recent times due to 24-hour markets and, therefore, daily closing prices having less significance than they once did. Another bullish factor is that Friday’s breakout completed a cup and handle continuation pattern. Also, Friday’s close took the RSI back into the bull range, above 60.
The S&P 500 also continues to recover and is within range of a breakout to new highs. The Dax and Nikkei both remain weaker, with the Dax already in a long-term downtrend. The long-term trend for the Nikkei remains up.
Brent Crude has been trading in a symmetrical triangle pattern since late January and is now at the point along the triangle towards the apex where a breakout can be expected. Technically, that breakout is already late and overdue. The long-term trend remains up, so the odds favour a breakout to the upside. A similar pattern can also be seen in Light Crude.
However, it’s not all bullish for the sector as both Heating Oil and RBOB Gasoline have potential head and shoulders top patterns forming. These are not perfect patterns as the right shoulder is much shorter in time duration than the left shoulder. However, a break of the neckline in both markets would result in a change of long-term trend to down, and the breakouts would have very favourable asymmetric risk/reward.
Gold ended the week flat and has seen weakness since the failure to push through resistance from the September high. A break of the recent low would have bearish implications.
The currency markets have been quiet for the past couple of weeks, but the trend remains against the dollar.
## Interest rate futures
Interest rate futures have consolidated this week but remain in long-term downtrends. The shorter-term markets remain the weakest of the sector. The 10 Year T-note and 30 Year T-Bond are within range of new downside breakouts.