The bull trend for global stocks remains intact. This week saw both the Nasdaq 100 and S&P 500 print new all-time highs. The dollar continues to consolidate but remains in a long-term uptrend. Commodities remain mixed, and interest rate futures remain in a long-term downtrend in spite of record net long positioning of COT commercials.
Monday is Labour Day in the US so most markets will be closed.
From last week “The S&P 500 rallied to within a point of all-time highs, basis the continuation futures contract, but did print a new high basis the SPX. Strength remains in the US stock markets. The Nasdaq 100 is close to a test of all-time highs as well and could break out this week.” Both the Nasdaq 100 and the S&P 500 called to new all-time highs this week, and the long-term trend remains up. Two possible negatives are the bearish divergence on MACD and the fact that historically, September is the weakest month of the year for stocks.
Also from last week: “The Nikkei continues to advance from what may prove to be a right shoulder low of a possible inverted head and shoulders, which, if completed, would change the trend to up.” The Nikkei did break the neckline of the head and shoulders pattern and completed the change of trend to up. However, the breakout did not hold, and prices fell back to within the prior range but did hold above support. The lack of follow-through following the breakout is negative and we’ll need to see strong price action early this week for the pattern to remain intact.
The energy markets are showing some signs of early strength. Heating Oil was the first to breakout and resume the uptrend. Brent Crude is moving to the top of the range of a near 4-month rectangle mentioned in prior weeks. A breakout could see Brent rally towards the 87.00 level in the coming weeks.
Metals have seen some mixed price action this week. All markets in the sector remain in long-term downtrends, but Palladium has put in a strong rally and is by far the strongest in the sector. A change of trend to up is within range. Gold, Silver and Copper all remain in current downtrends and are all below resistance.
From last week: “Soybean Meal broke to the downside this week, completing a continuation rectangle pattern. If the pattern reaches its target, prices should decline to around the 300 level in the coming weeks.” Soybean Meal continued to decline, printing a low of 302.60, just above our 300 target. The trend remains down.
The Dollar Index moved lower this week but appears to be finding support around the 94.34 area. The long-term trend remains up and continues to favour the dollar against all of the majors. The dollar is strongest against the Australian Dollar, which fell to new lows for the current move on Friday, making its lowest print since December 2016.
Interest rate futures
In spite of record long positioning by commercials as reported in the COT report, interest rate futures have been unable to make any upside progress and remain, as a sector, in a long-term downtrend. Prices did see a partial recovery later in the week to claw back declines seen during the first half of the week. Upside breakouts and change of long-term trend to up remain within range on the 10 Year T-Note and 30 Year T-Bond.