LS Trader System weekly update 27th January 2013

The S&P 500 hit new 5 year highs again during the past week with the cash S&P 500 crossing 1500 for the first time since 2007. The March S&P 500 hit a high of 1499.1 and will very likely clear 1500 during the coming week. All time highs for the S&P 500 are now within range and may be seen in 2013.

The long term trends are therefore still up for stocks, up for bonds (although possibly not for much longer), mixed for the dollar and for commodities.

Stocks

The stock index sector remains bullish with 3 of the 4 indices that we trade at LS Trader reaching new multi year highs during the past week. The S&P 500, having hit new 5 year highs again this week will likely cross 1500 on the March contract on Monday and should the market be able to close above that psychological level, may well continue higher from there. With all time highs being within range over the coming weeks, that will be the focus of traders, who will try to keep pushing the market higher.

The March Nikkei 225 had another volatile week, continuing with the pattern seen during the 2 prior weeks of sharply lower prices early in the week followed by a strong recovery. The weekly charts show long lower shadows on the last 3 weeks’ candles, which indicates a strong rejection of the lows around 10400. Having been sharply lower earlier in the week, the market recovered to hit new highs for the current move on Friday.

The Dax narrowly held on to support and subsequently pushed to new highs for the current move, keeping the long term uptrend intact.

Commodities

The metals markets have been mixed over the past week but continue to be led by Palladium, which advanced 2.53% this week for a third consecutive week of advances. Palladium now stands at its highest level since 2011.

Strength continues to return to the energy sector with both Brent Crude and no leaded gas having good weeks. The trend remains up for most of this sector but is still down for U.S. Crude and Natural gas.

Last week we wrote about Feeder Cattle and suggested that the downtrending market may have a pullback to test the underside of the trendline, and that did happen this week. The market has closed pretty much bang on that level and is therefore at a critical point and could go in either direction. If the resistance level holds, a move lower to 135 may follow in due course.

Grains markets have shown short term counter trend strength during the past couple of weeks but the long term trend still remains down across the sector and the downtrend may resume during the coming weeks once support levels are broken. There is plenty of downside potential in these markets and sharply lower prices are expected in 2013.

Currencies

The dollar has been very mixed, both rising and declining against different major currencies. The Euro climbed to its highest level in 11 months and may now target 13750.

The British Pound completed a long term trend change to down for the first time in quite a while and having broken key support may now continue lower towards $1.53, in what may be a substantial downtrend over the coming months.

The dollar has continued its amazing run higher against the Yen and the LS Trader system has currently caught just over 1000 spread betting points profit from this trade since the system entered long back on the 15th November.

Interest rate futures

Interest rate futures have all seen bearish price action this week and now look set to test critical support during the coming week. Will the much-anticipated collapse for this sector finally be arriving? The position will be clearer depending on how the market reacts when major support is tested, possibly early in the coming week.

Good trading

Phil Seaton

LS Trader

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