Weekly Update – 28 October 2018 – LS Trader

The stock market sell-off continued this week, and the long-term trend is now down for stocks. The dollar has seen some strength, as have interest rate futures. The long-term trends are currently down for stocks, up for the dollar, down for interest rate futures and mixed for commodities.

Stocks

The depth of the sell-off in global stocks has been sufficient to change the long-term trend to down for all four stock indices we trade at LS Trader. This week’s weakness has seen the Nikkei, Nasdaq 100 and S&P all complete changes of trend to down, joining the Dax, which was already in a long-term downtrend.

Commodities

Palladium hit a new all-time high as forecasted here in recent weeks. Palladium remains the strongest of the metals and currently the only one in a long-term uptrend. Gold also rallied and made its highest print since mid-July.

The energy markets remain mixed but have seen weakness over the last month. RBOB Gasoline completed a change of long-term trend to down and is the first in the energy sector to do so. This week’s low was the lowest print since February.

Grains remain in a long-term downtrend except for Oats, the strongest in the sector, and Rough Rice.

Currencies

From last week: “Breakouts could be seen in favour of the dollar against a few of the major currencies this week, and the dollar index may also test its mid-august high.” Dollar strength resumed this week in several markets, with the Dollar Index breaking out to new highs for the current move. The dollar also broke out against the Euro and Swiss franc. The long-term trend currently favours the dollar against all of the majors.

Interest rate futures

Interest rate futures have rallied this week, moving inversely to stocks as part of a flight to safety. The long-term trend remains down for interest rate futures except for the UK Long Gilt, which remains in a long-term uptrend. Gilts could complete a breakout to the upside this week and continue to be the strongest market in the sector.

Good trading

Phil Seaton

LS Trader

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