The markets have been very active once again this week, with large moves being seen in virtually all market sectors. Stocks, currencies, metals, interest rate futures and energies have all delivered significant price moves over the past few days.
The long-term trends remain as before overall, but there have been changes of long-term trends in a couple of individual markets. Currently, the long-term trends are down for stocks, up for interest rate futures, mostly down for commodities (Gold being the notable change this week), and mixed for the dollar.
Monday is Presidents’ Day in the U.S., so many U.S. markets will be closed.
Each of the four stock indexes that we trade at LS Trader fell to new lows this week, but all have bounced higher having found some support. This has resulted in some momentum divergences, so we may see a bit more upside follow through next week, but the long-term trend is down across the board for stock indexes.
The S&P 500 tested support but was unable to break below the prior low. The long-term trend remains down, and the RSI is in the bear range, so we may yet see another test of the recent lows.
The Nasdaq 100 continued with weakness and completed a change of long-term trend to down as expected. However, having printed its lowest level since October last year, the Nasdaq subsequently bounced higher. As with the S&P 500, the trend remains down in spite of the bounce.
The Dax dropped to its lowest level since October 2014 but managed a bit of a recovery from Thursday’s new low for the move. In spite of the recovery, the Dax still ended the week lower by over 300 points.
There are signs that some commodities markets may be forming a bottoming process, led higher by precious metals.
Gold short higher for a second consecutive week, and strength seen this week was more than sufficient to complete a change of long-term trend to up. This week’s high was the highest level that Gold had reached in a year. This week’s Gold RSI print was its highest since October 2010; such has been the extent of recent strength. Thursday’s move higher of over $60 was one of the biggest daily moves in recent times. From Thursday’s high, there has been a bit of weakness, but the long-term trend is firmly up, and there is no bearish divergence or a slowing of momentum, and the market remains well above support.
Silver has also moved higher, but remains weaker than Gold, and has as yet fallen short of completing a change of long-term trend to up. That could follow over the next week or so if the precious metals rally persists.
The energy markets have had another highly volatile week, making large percentage swings on an almost daily basis. This week has seen some of the energy markets fall to new multi-year lows, but an aggressive bounce was seen during the latter part of the week. The long-term trend remains down for the sector, and it remains to be seen as to whether we have seen the bottom in these markets.
The dollar index has seen continued weakness this week, moving further below the 200-day moving average. The RSI has also moved further into the bear range, but as yet there has not been sufficient weakness for a change of long-term trend.
Other currency markets have seen mixed trading. The Euro, which is a close inversion of the dollar index, rallied to its highest level since October, but as yet has not completed a change of long-term trend to up.
The biggest move once again came in USD/JPY, where the Japanese Yen rallied sharply against the dollar for a second consecutive week, pushing the dollar to its lowest level since October 2014.
Interest rate futures
Interest rate futures all soared higher this week, making new highs for the current move in each market. Thursday saw a sharp rally which could not hold through the close, and further weakness on Friday. However, there is no momentum divergence as the new high in price was accompanied by a new high in momentum. The RSI is also firmly in the bull range, and the long-term trend remains up, with all the markets still well above support. As long as these factors remain true, the uptrends remain intact.