The stock markets rallied to new all-time highs again since breaking the neckline of the massive head and shoulders continuation pattern, which has price projections over 3600.
A bearish wedge/ending diagonal pattern is still evident on both the S&P 500 and the Nasdaq 100, but for now, the bulls are in control and the trend is up. The RSI on the S&P 500 is at its highest level since January 2018 when the market nosedived.
The commodities markets remain quiet, and there is not much action in most markets in the sector. Brent Crude is the leader in the energy sector. Gold potentially printed a low for the move this week and still looks poised to move higher and test the September high over the coming months. Whether Tuesday’s low proves to be the corrective low or we see another new low before strength returns remains to be seen. The RSI is just about holding at bull range support.
The currency markets remain mixed. USD/JPY is our sole currency trade at present, and support held this week, keeping the uptrend intact. The long-term trends narrowly favour the dollar at present against the majors.
Interest rate futures
The inverse relationship between stocks and bonds remains at a critical juncture and was not decided last week. As before, if stocks continue to rally, then bonds will likely see further weakness. Conversely, a turn higher in bonds (weakness in stocks) could also be seen. This position is likely to be resolved one way or the other during the week ahead.