Weekly Update – 9 June 2019 – LS Trader

Stocks

Stocks put in a strong rally this week. The long-term trend remains up for US and European indices. Of the four indices that we trade at LS Trader, only the Nikkei is in a long-term downtrend.

However, in spite of the long-term trend being up for US stocks, the RSI remains in the bear range. This week’s strong 5-day rally has not been sufficient to take the RSI back up to 60. This week’s rally has retraced between 50 and 61.8% of the decline from the April peak on the Nasdaq 100 but has exceeded the 61.8% retracement on the S&P 500, which remains the stronger of the two. If either market retraces more than 78.6% of the prior decline, we will likely see the April peak exceeded and the uptrend resume.

Commodities

From last week: “Gold is potentially decoupling from the dollar as both are rallying together. Similarly, the rally in Gold is in the opposite direction to Copper, which could complete a change of long-term trend to down this week. Silver remains in a long-term downtrend but may test resistance this week.”

Gold put in a strong rally this week and broke through resistance, and now looks set to test the February high. Gold has been in a sideways range for six years and continues to build what could be a massive head and shoulders bottom. If the market can get above the 1400 level, we could see a rally back towards the all-time high at 1923.7 printed back in 2011.

Currencies

The dollar has seen further short-term weakness this week. The long-term trend continues to favour the dollar against all of the majors except the Japanese Yen. With the Dollar Index declining this week, a new low RSI print at 35 broke bull market support, with the lowest RSI reading since February 2018.

Interest rate futures

Interest rate futures continue to rally. The 5&10 year T-Notes and the UK Long Gilts all made new highs for the current move. The long-term trend remains up across the sector.

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