The past week has seen volatile price action in multiple markets, many of which have made corrective price moves against their primary long-term trends. The current trends are down for stocks, up for the dollar, down for interest rate futures and mixed for commodities.
Stocks rallied sharply this week in what is corrective price action against the long-term downtrend. The corrective rallies were sufficient to end the trend in the short-term for both the Nikkei and Dax, but for now, the S&P 500 and Nasdaq 100 remain in current downtrends and below resistance.
It’s interesting to note that in spite of the sell-off over the past few weeks, the COT reports that large speculators on the S&P 500 have their highest net long position since 2013. Commercials remain heavily net short.
We’re entering into a seasonally bullish time of year for stocks, but the current technical picture always takes precedent. While there is no question that at monthly chart level stocks are still in a bull market, the weekly charts are less bullish, and the daily charts show a clear downtrend following the substantial technical damage done over the past few weeks.
The metals markets have had a mixed week with some strong and weak days seen in all markets. The long-term trend remains down for the metals except for Palladium, which is still the leader. Copper has a potential inverted head and shoulder setup and may test the neckline this week. However, the long-term trend is still down.
The energy markets have seen additional weakness this week, but for now, the trend remains up for all markets except for RBOB gasoline, which completed a change of trend to down two weeks ago. A trend change to down is within range for Crude Oil and Brent Crude, and that could be completed within the next couple of weeks.
The dollar saw some weakness this past week, which is also likely corrective against the long-term dollar uptrend. The dollar has been strongest against the Swiss franc, rallying this week to its highest level since May 2017.
Interest rate futures
Interest rate futures moves sharply lower again this week. The 30 Year T-Bond broke to the downside from a 5-week flag pattern which would project targets around the 130 level. The trend remains down across the sector for US markets and only the UK Long Gilts. Gilts were also sharply lower this week having failed to break upside resistance.