The past week has seen stocks move slightly lower whilst the dollar has continued its recent recovery. The long-term trends are mostly down for stocks already ( the exception being the S&P 500) and are also down for the dollar. Whether the dollar rallies sufficiently over the summer to complete a change of long-term trend to up remains to be seen.
The stock markets ended the week lower. The S&P 500, currently the strongest of the four indexes that we trade at LS Trader, and the only one of the four in a long-term uptrend, fell to test its 50-day moving average this week. For now, price remains above both its 50 and 200-day moving averages and the RSI is also in the bull range. If we see additional weakness this week, with support at 2030.5 broken, we may also see the 40 level broken on the RSI. This would indicate further weakness over the coming weeks.
The Nasdaq 100 remains weaker and is also below both of its moving averages, and, more importantly, the RSI is already in the bear range. To continue to monitor the potential brooding top formation in this index, which if the stop competes would indicate sharply lower levels over the coming months. It’s possible that we will see critical support tested this week.
The commodity markets continue to show signs of strength, although not yet anywhere near across the board. This week may see a critical change of long-term trend to up in more of the energies sector as most markets in this sector look set to test trend-defining resistance. Crude Oil already completed a change of trend to up for the first time in a couple of years, but as yet has been unable to break decisively higher.
The grains markets, particularly Soybean Meal and Soybeans have seen further strength this week. Soybean Meal reached and exceeded our 363 target and may yet continue higher towards our next target at 375. Based on the weekly chart we have a new high in price accompanied by a new high in momentum, which keeps the focus towards higher levels. Things are less bullish at daily chart level, where there is bearish divergence evident between price and RSI, and where volatility remains elevated.
Silver looks as though it will fall short of our 1850 target at this time. The market fell below the 60 level on the RSI, which is something that we did not want to see if our target was to be reached. The market has tested support on Friday and has held above it, but we will likely see support tested again this week. It’s possible that we will see further weakness this week before the long-term trend resumes.
Gold has also shown weakness along with Silver, and the RSI also dropped below 60. Here the market is also holding above support, but that level may also be tested this week. The long-term trend for both precious metals is still very much up, and we can look for our 1350 target in Gold and our 1850 target in Silver to be reached over the coming weeks after the current correction ends.
Not all metals are in long-term uptrends. Copper, which failed to breakout to a new long-term uptrend back in March has resumed its long-term downtrend this week, falling to its lowest level since mid-February. The RSI here has fallen back into the bear range. This does not bode well for the global economy, and we may see further weakness down to major support at 194.70 over the summer.
The dollar has continued its recent recovery, but for now, it remains in a long-term downtrend against all the majors with the exception of the British Pound.
Interest rate futures
Interest rate futures are edging higher towards a test of critical resistance. We could see several markets in this sector breakout this week and print their highest levels since the spike high in February. The long-term trend remains up across the sector.