Weekly Update 23 November 2014 – LS Trader

U.S. stock markets rallied to new all time highs at the open on Friday. The S&P 500’s new high was 2072.25 basis the December e-mini contract. Both markets (Dow and S&P 500) dropped back from those highs but stocks remain in very bullish territory. Friday was in fact a wild day in many markets and some large moves were also seen in other markets, particularly currencies.

Stocks

As written above, the S&P 500 printed new all time highs on Friday before settling lower. The RSI has edged above 70 for the first time since July, but the price advance, which although not overly convincing, leaves little doubt that the trend remains firmly up at present.

The Nasdaq 100 also reached new multi-year highs early on Friday but here the reversal seen by the end of the day was a bit more pronounced, as the close was some 35 points off the high of the day.

Overseas markets have also been strong but not to the extent of U.S markets. The Nikkei again printed a new multi-year high but ended lower in what was quite a choppy weak. We continue to see bear divergence between price and RSI as the market consolidates beneath the recent high.

The Dax had the strongest day on Friday of the 4 indices that we trade and the RSI crossed above the 60 level for the first time since September. This is a bullish move and suggests further strength will be seen and possibly a test of the all time high that was printed earlier in the year. Whether sufficient strength remains for new all time highs remains to be seen.

Commodities

Silver continued to advance this week and may be in the early stages of a rally higher having pierced through a trendline that has remained intact since August. However, the rallies seen in both gold and silver over the past few weeks are still viewed as corrective as the long-term trend in both cases remains firmly down, something that is unlikely to change this year at a minimum, so further lows cannot as yet be ruled out irrespective of how negative sentiment has become towards the precious metals over the past few weeks.

The 4 energy markets that the LS Trader system has open positions in, both crude markets, heating oil and no leaded gas, have all seen counter trend moves this week. However, in spite of these corrections the system currently shows a combined 6665 points profit from these trades and the trends in each remains intact. Natural gas, which is the only energy market where we are currently flat has had a wild week. Gas is, in terms of our proprietary trend indicator, by far the most bullish of the energy markets and the only one that is within range of a change of trend to up, which could be seen in the coming weeks. However, for now the long-term trend remain down across the board.

Currencies

The dollar index carried to new highs this week and perhaps significantly, made a new high close not just on a daily basis, but also at weekly level too. This is the highest print for the index since June 2010. If prices can get decisively above last week’s high, we may be set for an assault on the 90 level although this will in no small part be dependent on whether the dollar can push the Euro to new lows. The Euro itself has had a large reversal, with Friday’s bar closing below the prior 9 days’ lows. This, coupled with the RSI’s inability to exceed 50 argues for new lows early next week.

The USD/JPY continues to rack up excellent profits for the LS Trader system as price action this week saw the dollar rise to new multi-year highs against the Yen. Some weakness was seen later in the week but the trend still very much favours the dollar and has so far produced 769 pips profit for the LS Trader system.

Interest rate futures

The longer-term interest rate futures markets all roll from December, which expires this week, to March. That aside there is relatively little happening in this sector at present, which has gone sideways for the most part for the last few weeks. This price action still appears to be a consolidation and may be a build up to further rally and a test of the local top. The RSI has so far found support in the 40-50 range, which it typically does in bull markets. There is little doubt that interest rate futures are still in bull market conditions on a longer-term view.

Good trading

Phil Seaton

LS Trader

 

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