The past week has been a continuation of the calm before the storm. Many markets have corrected against their primary trends over the past few weeks, but several looks set to resume their longer-term moves as early as this week.
The long-term trends remain mixed for stocks and commodities, but down for the dollar and interest rate futures.
From last week: “The S&P 500 has closed right on its key 200-day moving average and remains perilously positioned above MA support and the February lows. For now, the trend remains up, but that picture could quickly change.” The 200-day MA held, and the market ended the week higher. However, Friday printed an indecision pattern on the daily chart with the high for the day just below the 50-day MA. Prices currently are sandwiched between the two MAs and could go either way.
The Dax’s recovery continued, crossing both the 50 and 200-day MAs this week, but finding resistance at the later and turning down on Friday. The long-term trend remains up for US stock indexes and down for the Dax and the Nikkei.
Gold reached a high of $1369.4 this week before pulling back but remains within the range of a potential key breakout. There is an inverted head and shoulders pattern evident on the weekly chart which dates back to 2013 which if completed would give a target in the region of $1720, large upside potential.
The energy markets have got back on track, and their recent correct declines have come to an end, with both Light Crude and Brent Crude breaking out to new highs for the current move. Both markets made their highest print this week since late-2014. Heating Oil and RBOB Gasoline could breakout this week.
From last week: “The area around 90.50 is significant resistance for the Dollar Index as that level represents a change of polarity resistance from the September 2017 lows and also the high of this year.” This resistance area continues to hold, and as long as it does the focus is towards lower prices for the Dollar Index.
The inverse is true for EUR/USD, which remains above its key support zone and may push higher this week. The British Pound continues to advance and may be set to test its January high soon. The RSI remains in the bull range, and the long-term trend remains up.
Interest rate futures
The long bond tested resistance again around the 147 level and once again turned lower, keeping the long-term downtrend intact. Friday closed below the 50-day MA on the Long Bond, and we may see prices head back towards the February lows.
The shorter-term markets in the sector remain weaker and could test support as early as this week. The long-term trend remains down across the sector.