Overall it’s been a quiet week, as is to be expected during the holiday period. Two consecutive shortened trading weeks due to and light trading due to the holidays generally results in little in the way of market moves, even though this is historically a bullish few days of trading in the stock markets. Another quiet week probably lies ahead before we see a big uptick in trading activity during the first week of January.
As we enter the final trading week of the year, the long-term trends remain pretty much as they have for most of the year to date, down for the commodities, up for the dollar and mixed for interest rate futures. The only real change has been in stocks, where the long-term trend has been up for most of the year but is now mixed since weakness seen at the end of August.
The S&P 500 had a bullish week, rallying from above support and moving back above its 200-day moving average. The long-term trend, however, remains down, and the RSI is still in the bear range. As we mentioned last week, this is a bullish time of year with the last five trading days of the year and the first two of the New Year forming the traditional Santa Claus rally.
The Nasdaq 100 traded in almost identical fashion to the S&P, but the Nasdaq remains the stronger of the two indexes. The tech index is considerably above its 200-day moving average, and it has remained so since early October. Here the long-term trend is up and the RSI is in the bull range.
The Dax and the Nikkei both remain considerably weaker than their US counterparts and are both still in long-term downtrends.
Both Crude Oil markets, Brent and Light Crude, traded at new lows early in the week before a bit of a recovery during the remainder of the week. Light Crude closed the week above Brent, which is unusual as Brent historically trades at a significant premium over Light Crude.
Natural Gas had a very strong week, rallying sharply from the new sixteen year lows that were printed during the prior week. It looks likely that the downtrend is coming to an end, at least in the short-term, although the long-term trend will remain down for the foreseeable future.
The dollar index moved lower this week, trading back below its 50 day moving average, but still above the 200. The long-term trend is still up for the index, and the RSI remains in the bull range.
The dollar has been weak against most of the majors this week, losing ground against all of the commodity-based currencies. Changes of the long-term trends to up are within range for both NZD/USD and AUD/USD. Even the currency against which the dollar has been strongest of late, the Canadian dollar, gained ground on the greenback.
Interest rate futures
The uncertainty in the interest rate futures markets that has been present for quite some time continued this week. Trading in this sector can only be described as sloppy and choppy and without overall trend.
These interest rate markets continue to move mostly sideways, but towards the lower end of their recent trading ranges. RSI readings hovering around the 50 level indicate an almost complete lack of trend at present. However, this is one sector where things can get moving very quickly and breakout levels are not that far from current prices, so we should see some action in these markets early in 2016.