Weekly Update – 4 August 2019 – LS Trader

This past week saw the expected heightened volatility surrounding the Fed meeting on Wednesday. The Fed cut rates by 25 basis points, but the market was expecting more.

Stocks

Stocks broke lower in volatile fashion this week, breaking short-term support in the process. The long-term trend remains up, but this week’s action has done some technical damage. The RSI on the S&P 500 has closed right on the 40 level, which is bull market support, so next week could be a pivotal week. A decisive move below the 40 level will indicate considerable further weakness and a range shift in the RSI to bearish.

Commodities

The metals sector saw some wild swings this week. Gold, Silver and Palladium all remain in long-term uptrends. Copper, the only one of the four metals that is in a downtrend, broke recent support to fall to its lowest level since January.

Currencies

The British Pound fell to its lowest level since January 2017. The long-term trend is still down. However, there has been some evidence of buying due to the long lower shadow on Thursday’s candle followed by a bullish engulfing candle the next day, so we may see a corrective bounce. Another factor of interest is that commercials, the smart money, registered their third-largest long position in history on the Pound, so the smart money does not perceive Brexit to be bearish.

Interest rate futures

Interest rate futures rallied sharply this week, breaking to the upside. We have written in recent weeks that the long-term uptrend was intact and that price structure was incomplete and that we were expecting new highs in these markets. We got them this week.

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