The past week has seen mixed trading in several asset classes, with new all-time highs being seen in the S&P 500, the dollar continuing its recovery, and some decent sized moves in several commodities markets, which includes downside breaks in precious metals.
This week sees the last Fed meeting of the year. The two-day meeting is on Tuesday and Wednesday this week. This Friday is December triple Witching, which sees the quarterly stock index and currency futures expire and roll to the March contract.
The bull market in stocks remains intact in spite of a few attempts to break down. Breaks of short-term support have been met with buying, and new highs could be seen again this week.
The S&P 500 fell on Monday and Tuesday before finding support on Wednesday and turning higher, before making an all-time high close on Friday, but a little below the all-time intraday high printed on Monday.
The Nasdaq 100 traded in a similar fashion and found support just above its 50-day moving average. The recent sell-off only took the RSI down to 45, well above the 40m level, which is bull market support. For now, the long-term trend remains up, and new highs look a distinct possibility.
Volume was above average, but that’s to be expected as many people commence rolling to the next contract around a week ahead of expiry. The December contract expires this coming Friday.
Brent Crude broke short-term support but reversed higher on Thursday and Friday and may be poised to breakout to new highs again. Similar moves have been seen in the other energy markets except for Natural Gas, which this week has made it’s umpteenth breakout of the year to the downside.
Gold’s recent weakness has continued this week, and a change of long-term trend to down is very much within range this week. Silver, by far the weakest of the precious metals, has already broken to the downside and is trading at its lowest level since July.
The Dollar Index rose throughout the week and moved back above its 50-day MA. However, volatility has continued to compress throughout the advance of the past two weeks, and the RSI, although rising, remains below the 60 level, which suggests the recent rally is corrective and against the primary trend, which is still down.
The Australian dollar had a mixed week, initially breaking above short-term resistance before reversing and falling to new multi-month lows on Friday.
The US dollar could be on the verge of a long-term change of trend to up against the Canadian dollar. The Dollar is also within range of an upside breakout against the Yen and Swiss franc, where the long-term trend already favours the dollar.
EUR/USD remains in a long-term uptrend in spite of recent weakness. Commercials have a near-record net short position and are now the most short they have been since 2007.
Interest rate futures
Interest rate futures remain in a long-term downtrend. As has been the case for a while, the shorter-term markets are the weakest and the 30 Year T-Bond is the strongest. The 10-Year T-Note remains very near to critical support, which if broken could yield a significant decline, potentially all the way back to the March lows around 121.78