Weekly Update – 26 April 2020 – LS Trader

Stocks

From last week on the Nasdaq 100: “Friday’s bar turned lower, and that may be the end of the rally.” Stocks opened the week lower but did regain some of the declines with a strong day on Friday, but still closed down for the week.

Commodities

The energy markets had the wildest of weeks with May Crude Oil declining to -$40.32 before recovering. However, although weakness was also seen in June, which made a low print of $6.50, it never made the extreme move that May did. It is normal to roll out of the expiring contract around a week before expiry, and those that stayed in May got caught out. Therefore, the price action in June is more important as it was the liquid contract at the time. Nonetheless, one would never think that such prices levels would be seen in Crude. Whether we have a similar situation when June expires next month remains to be seen.

The trend remains down in the Crude markets. Still, there is very little value in a short position due to the extreme volatility; the required position sizing makes it all but impossible to structure a short trade with asymmetric risk-reward from current levels.

Gold dipped on Tuesday but recovered and rallied back towards the recent highs, keeping the uptrend intact.

Currencies

The dollar remains in the middle of the recent range but is still in an uptrend against the majors. We are currently flat all currency markets, which is a situation that does not arise that often.

Interest rate futures

From last week: “There are arguable head and shoulders continuation patterns forming on the 30 Year T-Bond and 10 Year T-Notes. A break of the neckline would suggest new highs and possibly negative interest rates in the US.”

Interest rate futures continue to trade in the vicinity of the neckline and could yet break to new highs. The trend remains up across the sector.

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