The past week has seen mixed trading in numerous markets. The stock markets traded higher this week, as did the US dollar against most of the major currencies. Commodities markets remain in a long-term bear market, and interest rate futures moved higher.
The long-term trends remain as before and are mixed for stocks and interest rate futures, up for the dollar and down for commodities.
The stock markets shrugged off the tragic events in Paris and moved higher this week. Both US indices are within range of testing their recent highs. The S&P 500 gained an impressive 90 points this week, which has taken the RSI back to a test of the 60 level. A decisive move through 60 on the RSI would indicate a likely test of the recent all-time highs.
The Nasdaq 100, which is still the strongest of the four stock indices that we trade at LS Trader, has already seen its RSI move through 60, so there is a good probability of new highs for the index in the coming days.
The Dax and Nikkei continue to lag their US counterparts but are also continuing higher. For now, the long-term trends in both the Dax and the Nikkei remain down, but if strength persists, in what is seasonally a bullish period for stocks, we could see both markets complete a trend change to up between now and the end of the year.
Both Copper and Gold dropped to new lows this week. Copper’s low was its lowest print since April 2009, and Gold fell to its lowest level since 2010, which was some eighteen months before it printed its all-time high. Both markets have since bounced a bit higher, but a look at the long-term charts shows clearly how far these markets have fallen. From a technical standpoint, both markets still have potentially further to go.
Silver remains slightly stronger and is trading just above a key low, which is its lowest level since 2009. If this key low can be broken, in a move confirmed by Gold, we could still see lower levels.
Palladium has also found support just above its key support level but remains in a deep bear market. Last week’s lows and the multi-year lows in Silver and Palladium could be key to the metals’ price action over the coming weeks.
The dollar index moved above last week’s high to reach its highest level since April and remains on target for further gains towards our target at 101.43
The Euro fell to its lowest level since April and remains on course for further weakness down towards and ultimately below the March 2015 lows.
Interest rate futures
Interest rate futures have seen mixed trading this week as we approach the expiry of the December contract and roll forward to the March contract in the next few days. The long-term trends remain up for four of the five markets that we trade at LS Trader, with only the 30 Year T-Bond in a long-term downtrend.
The long bond has shown some strength in the past couple of weeks, but the trend remains down and the RSI is still in the bear range. A turn lower from not much above current levels will be required to keep the downtrend intact, a view that would be bolstered by the RSI not exceeding the 50-60 bear market resistance zone.