Weekly Update – 16 December 2018 – LS Trader

This week ahead sees the 2-day FOMC meeting and triple witching on Friday. It’s generally a week that sees declining volume as traders wind down for the holiday, but given the Fed meeting, triple witching and the current geopolitical climate, there is room for some large swings in the markets.

This past week saw us roll from December into March for all currency and stock index futures.

Stocks

From last week: “The long-term trend remains down for global stock indices, and we could see new lows for the current move completed this week.” The S&P 500 did break to new lows this week as anticipated, but so far the Nasdaq 100 has not. However, the Nasdaq 100 is within range of testing support this week and may also breakout.

Commodities

Gold came close to completing a change of long-term trend to up before moving lower. The RSI has attempted to break the 60 level but has been unable to do so decisively and therefore remains in the bear range. A breakout above last week’s high will likely change that.

The energy markets have traded mostly sideways this week and remain in a long-term downtrend except for Natural Gas. Natural Gas made a sharp move lower this week and broke support in the process, which resulted in the LS Trader system exiting a very profitable long trade. The system remains short the remaining four markets in the sector, all of which are very profitable trades.

Currencies

The British Pound gapped lower on Monday and made a new weekly low close for the current move, which was the lowest weekly close since March 2017. The long-term trend remains down. Sentiment is extremely negative for the Pound, as one would expect given the current negative news flow surrounding Brexit. However, the longer-term picture is not as bleak as it seems. There is substantial commercial buying as reported in the COT, which means that the smart money thinks the Pound will move higher. There is also some momentum divergence, waiting for a trigger. For now, the trend remains down, and it will require considerable strength for that to change.

Interest rate futures

Interest rate futures have had a mixed week having hit new highs for the current move before pulling back. The long-term trend remains up for interest rate futures except for the 30-year T-Bond, which for now, remains in a downtrend.

Good trading

Phil Seaton

LS Trader

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