This week has seen extremely volatile trading in many markets, including stock indices, which had a wild ride on Wednesday. The market moved sharply lower, taking out many sell-stops, before reversing higher and going on to make new highs, which included an all-time high weekly close. However, Friday’s candle is a little bearish on both the S&P 500 and Nasdaq 100, the latter printing a dark cloud cover, but both showing selling tails. A move above Friday’s high would be bullish.
The first five trading days of the year completed this week and based on the close at the end of day five, the market was higher. This indicator has an 81.8% accuracy ratio of predicting full-year gains, with 36 of the last 44 first five days up resulting in up years for stocks.
The commodities markets also saw some huge swings. Metals and energies both had massive reversals. Amongst all the chaos, Palladium printed a long-legged doji but made new all-time highs nonetheless.
We continue to watch EUR/USD for the January effect as an indicator as what may lie ahead for the year in the currency markets. The January effect shows a high probability of EUR/USD printing its high or low for the year during January. Friday’s low broke short-term support by a single tick, but then rallied, forming a spring. This may result in some short-term strength during the coming week.
Interest rate futures
Interest rate futures also had a volatile week with a significant move on Wednesday which was sharply reversed. The long-term trend remains up for the sector, but as before, upside breakouts, as well as trend-defining support, are within range. This sector could break either way over the coming weeks.