Weekly Update – 19 May 2019 – LS Trader

Stocks

Stocks had a mixed week after a weak opening on Monday before a recovery during the middle of the week, which still resulted in a down week. The RSI on the daily S&P 500 dropped below the 40 level but only for a day. However, that breach of 40 was enough to have the RSI in a bear range. The long-term trend remains up.

Commodities

From last week: “Silver is the most likely to complete a change of trend to down shortly.” Silver broke support as expected, and completed a change of long-term trend to down, making its lowest print since December. The RSI remains in the bear range, as it has since March.

The grains markets may have bottomed this week as aggressive buying was seen shortly after the open. However, the long-term trend remains down, with Soybeans and Soybean Oil still in current downtrends and below resistance.

Currencies

It’s been a bullish week for the Dollar, which has advanced against most of the majors. The Dollar Index may test the late April high this coming week. The RSI crossed back above the 60 level this week.

The British Pound had a large head and shoulders bottom forming on the daily chart, but that pattern did not complete. Instead, the right shoulder has formed a head and shoulders top, and the neckline was violated. This indicates further weakness towards the January low and a possible change of long-term trend to down in the coming weeks.

The EUR/USD effect, which we have written about many times, stating that January tends to set the high or low for the year, continues to suggest that the Euro peaked at 1.1718 basis the back-adjusted continuous contract, back on January the 10th, and that the Euro will trade below that level (Dollar bullish) for the remainder of 2019.

Interest rate futures

From last week: “Interest rate futures continue to show signs of strength as the long-term uptrend appears to be getting back underway. The March high could be tested in the coming weeks.” Interest rate futures continued to rally this week. The 3 Month Eurodollar, basis the March 2020 contract, rallied to a new high for the current move. The remaining markets in the sector may test their March highs this week. The trend for interest rates, which move inversely to prices, remains down.

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