Weekly Update – 22 April 2018 – LS Trader

From last week: “Many markets have corrected against their primary trends over the past few weeks, but several looks set to resume their longer-term moves as early as this week.” This past week has been more active than the recent few weeks as multiple markets did breakout as expected. Further breakouts and resumptions of the primary trend could follow this week, especially in the interest rate futures sector, where new lows for the year are within range.

Stocks

The Nasdaq 100 ended the week higher by 0.5% but has printed a doji on the weekly charts with a long upper shadow. This has bearish implications for the short-term as a doji is an indecision bar, and the long upper shadow shows that the highs of the week are strongly rejected after the run-up of the past three weeks. The long-term trend is still up for the Nasdaq 100, but we’re now in the middle of the range with no short-term trend evident.

Price action in the S&P 500 has been very similar, and no short-term trend is evident. The same is true for the Dax and the Nikkei, but both are weaker than their US counterparts due to having fallen sufficiently in February to complete long-term trend changes to down.

Commodities

From last week: “Heating Oil and RBOB Gasoline could breakout this week.” Both Heating Oil and RBOB Gasoline did breakout this week but as yet have had little in the way of follow through. Both of these markets continue to lag the stronger Crude Oil Markets, with Brent Crude being the strongest at present.

Gold continues to coil in a range just below a key resistance level (neckline of a large inverted head and shoulders). The market could break either way at this stage but the breakout, when it comes, is likely to yield a big move. Silver was the stronger of the two precious metals but remains in a long-term downtrend for now. A change of trend to up is within range.

Lumber, which is currently in a huge bull market, printed new all-time highs again this week and still has potentially further to run.

Currencies

From last week: “The area around 90.50 is significant resistance for the Dollar Index as that level represents a change of polarity resistance from the September 2017 lows and also the high of this year.” The Dollar Index is once again pushing up towards that key level of resistance which if successfully taken out may lead to a period of dollar strength. However, the long-term trend remains against the dollar.

Interest rate futures

From last week: “Friday closed below the 50-day MA on the Long Bond, and we may see prices head back towards the February lows. The shorter-term markets in the sector remain weaker and could test support as early as this week. The long-term trend remains down across the sector.” The shorter-term markets did test support as expected and both the 3-month Eurodollar and 5 Year T-notes broke to new lows for the current move. Both the 10-year and Long bond could also make downside breakouts this week. The trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

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