Weekly Update 29th June 2014 – LS Trader

The S&P 500 posted a new all time high on Tuesday basis the September e-mini contract but ended the week marginally lower. The range for stocks continues to be extremely tight as it does for the majority of other markets, the exception being a handful of commodities.

The LS Trader long-term trend analysis remains as before, up for stocks and interest rate futures, mixed for commodities (many are strengthening) and down for the dollar.

Stocks

As mentioned above, the S&P 500 rose to new all time highs this week but ended the week lower. The possibility of new highs remains and the trend is still clearly bullish. The Nasdaq 100 was for once stronger than the S&P 500, making a new multi-year high on Friday. The trend here is also bullish and with an RSI reading at 75 may yet head higher.

International indices did not fare so well; the Dax reversed sharply lower following the all time high posted on the 20th June, sufficiently to break through short-term support. The long-term trend is still up and it will be interesting to observe whether the 40 support level on the RSI holds over the coming week or so.

The Nikkei came within a few points of confirming a trend change to up but failed to break through resistance, ending the week considerably lower. Further weakness may be seen and the market may head lower towards the 14,835 support level in the coming days.

Commodities

The metals markets have continued to show signs of strength. Gold, as we alluded to last week has completed a range shift on the RSI to bullish territory, but the move higher has so far fallen just short of breaking key resistance. Should price break through resistance soon, further strength towards 1392 may follow. Silver has also moved higher along with gold, but the latter remains in a long-term downtrend. Here too though the RSI has made a range shift, suggesting further strength.

Copper and palladium have also moved higher, with palladium retracing almost exactly 61.8% of the recent declines so far. Further strength back towards the recent high looks likely. Copper may also continue to rise, but unlike palladium, still remains in a long-term downtrend.

Currencies

The dollar has been weak overall and the dollar index has dropped to its lowest level in just over a month. The long-term trend remains down for the index, as it does against all the majors currently. For the most part the currency markets still remain relatively subdued.

The New Zealand dollar reached new highs basis the back-adjusted continuous contract, but remains just below the all time high print of 8808 posted in August 2011. The commodity currencies all continue to do well, with the Canadian dollar also continuing recent gains, and the Aussie also reached its highest level this year.

Interest rate futures

The long-term trend remains up for interest rate futures. Our 2 long positions in this sector remain intact. The 30-year T bond continues to trade above the shelf of support in a zone just below the recent lows. The focus will be towards higher prices as long as this level holds, but a break and close below this level would be bearish. Both the 5 & 10-year notes are moving higher once more, and the 5 year note looks set for a test of 60 on the RSI. A move above that level would suggest that prices may rise to test the recent highs.

Good trading

Phil Seaton

LS Trader

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