Weekly Update – 30 September 2018 – LS Trader

The past week has seen stocks unable to make new all-time highs and has also seen some strength return to the US dollar. Strength has also been seen in the energy markets.

Stocks

The S&P 500 failed to make a new all-time high this week and saw some weakness, but for now, continues to trade above support. The Nasdaq 100 remains weaker than the S&P 500 and failed to confirm last week’s all-time high. The trend remains up for both US indices and it will for the foreseeable future unless we get a huge meltdown.

From last week: “The head and shoulders pattern in the Nikkei is now well underway following a decisive break above the neckline. As per our comments last week, the pattern now projects higher to 24690.” The Nikkei was the strongest of the four indices we trade this past week and this week’s high of 24320 is well on the way to our target of 24690, which may be seen this week.

Commodities

Commercial traders have moved to net long the Silver market this month for the first time in history, which is a possible indication of a rally ahead. The LS Trader system was stopped out of our extremely profitable short trade on Silver this week where we had ridden the trend lower since the 27th June short entry at 1639. Friday’s strong up day was accompanied by above average volume. The long-term trend remains down, but a rally may be in the cards.

Gold also has a minimal net long commercial position but the trend remains down and active as the market has not been able to breach resistance.

Palladium is the strong horse in the sector, but Friday’s candle was a doji, and with both volatility and sentiment at very high levels, we may see a correction soon. The long-term trend, however, remains up, and a test of all-time highs which were printed back in January at 1124.9 may be seen over the coming weeks.

The energy markets have rallied this week. Brent Crude ended the week higher by 4.99% has rallied to its highest level since November 2014. Crude Oil also surged 4.03%. Heating Oil, which was the first market in the sector to breakout to the upside, advanced 5.72% and is also at its highest level since November 2014. The long-term trend is up for all energy markets.

Currencies

USD/JPY has continued higher to reach its highest level since December 2017. This week’s price action has consolidated above the top of a symmetrical triangle that dates back to 2015. This suggests that the current move has a long way yet to run over the medium-term timeframe.

Interest rate futures

Interest rate futures remain in long-term downtrends but have ended the week higher, having printed new lows for the move earlier in the week.

From last week on the 30 Year T-Bond: “The right shoulder low at 141.09 was broken, which invalidates the potential head and shoulder bottom and now projects further weakness towards 135.” This week’s low was the lowest low for almost four years.

Good trading

Phil Seaton

LS Trader

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