Weekly Update – 27 January 2019 – LS Trader

Many markets continue to consolidate, with moves being seen against the primary trend. There are, however, several markets within range of breakouts. The current long-term trends are down for stocks, up for metals, down for energies, up for interest rate futures, and mixed for the remaining commodities.

Stocks

Stocks have continued to rally against the primary trend this week, but the critical 60-level on the RSI, which is bear market resistance, has not been taken out on the S&P 500 or Nasdaq 100. Also, volume was much more substantial on the decline than it has been on the rally, where volume has continued to decline. This continues to support the notion that the long-term trend is down and that we will likely see stocks turn lower again soon and test the late December low.

Commodities

The metals have seen some weakness this week, before reversing sharply on Friday. Both Gold and Silver broke support, but may soon breakout back to new highs for the current move. Gold will likely breakout on Monday. Palladium, still by far the strongest of the metals, bounced off support and remains bullish.

Currencies

The British Pound has made quite a decisive upside rally over the past couple of weeks and looks to be heading for a change of long-term trend to up. This week has seen the RSI decisively break above the 60 level to enter the bull range. We wrote last year how the COT report showed commercials with a record all-time net long position, which flies in the face of conventional wisdom about Brexit being damaging to Britain. We can’t tell what the current commercial position is due to the US government shutdown.

The Euro dipped to a slightly new low against the Dollar but reversed sharply on Friday. The trend remains down. The Dollar also broke out against the Swiss franc, but so far without follow-through. The Dollar Index remains in a trading range, as it has been for the past several months.

Interest rate futures

Interest rate futures continue to consolidate but remain in a long-term uptrend across the board. The 30 Year T-Bond has undergone significant volatility compression so far this week, suggesting that a significant move is not far off.

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