The past week has seen the Nasdaq 100 breakout to new all-time highs and also sees the S&P 500 at a critical juncture. Price action in US indices this week will likely determine the path for the next few weeks at least.
The correction lower in the dollar may have ended, and we have seen a resumption of strength in the dollar. Metals remain weak and in long-term downtrends and continue to print new lows. Other commodities, especially grains, have also seen continued weakness.
From last week: “Support has been found at the bottom of the triangle (S&P 500), accompanied by the RSI holding and moving higher from bull market support. The triangle points to an upside breakout and rally to new all-time highs in the coming weeks for the S&P 500. The Nasdaq 100 also looks set for a test of all-time highs.”
The S&P 500 completed the breakout in what could be a bullish development and see a further rally back to test the late-January all-time high. The Nasdaq was stronger again and already completed its breakout to print new all-time highs on Friday. The RSI has remained in the bull range on the Nasdaq 100, with the recent correction finding support on the RSI precisely at the 40 level. The long-term trend remains up for US indices.
The energies markets have seen weakness this week, and Crude Oil’s breakout has been unconfirmed by other markets in the sector. Crude itself saw weakness this week and broke short-term support. The long-term trend remains up for the sector for now.
From last week: “Copper broke support and remains in a long-term downtrend, as do the other metals. Copper’s low print this week was the lowest print in almost a year.” Copper has continued to sell-off this week as the entire metals sector remains weak and continues to print new lows for the current moves.
The grains sector has continued to sell-off with the exception being Rough Rice. The soybean complex all printed new lows for the current move and remain very weak.
From last week on the currencies: “The dollar has seen continued weakness this week as sentiment recovers from very low levels for the majors against the dollar. The Dollar Index itself had reached extremely high bullish sentiment readings and is pulling back. However, the long-term trend continues to favour the dollar across the board.”
Dollar weakness continued early this week but has since seen a return of strength. Multiple currencies, including the Dollar Index, are within range of breakouts this week, and we could see the resumption of a dollar uptrend.
Interest rate futures
Interest rate futures continue to consolidate just below key resistance levels. For now, the long-term trend remains down for the sector, but as covered in recent weeks, that could be on the verge of changing. The commitments of traders report (COT) remains at or near record net long positions for commercials and record net short for large speculators. Such a profile usually resolves itself in favour of the commercials, which would suggest a change of trend to up will be completed in the coming weeks for the longer-term markets. The shorter-term interest rate futures markets remain weaker than the long-term futures.