LS Trader Weekly Update 13th August 2012

Stocks have continued with recent strength and all four of the stock indexes that we trade at LS Trader have advanced this week, even the two indexes that are in a long-term downtrend, the Nikkei and the Dax. As a general rule the dollar moves in the opposite direction to stocks so the rise in stocks would normally equate to a drop in the dollar, but that has not been seen this week as for the most part the dollar has gone sideways, remaining undecided on future direction.

The long-term trends are still mixed across the different market sectors

Stocks

The S&P 500 continued with recent strength, making new highs for the current move and remaining on target for a test of the year’s highs posted in early April

The Nasdaq 100 advanced 1.87% for the week and still looks set for a test of the year’s highs, although this market remains further back from the highs than the S&P 500.

The Nikkei 225 had the biggest up-move for the week, advancing 2.82%, bringing the downtrend to an end for the short-term. However, the long-term trend is still down and considerable further strength will be required before that changes. The 9200 area looks like the next target to the upside if the rally continues.

The Dax also advanced, for a fifth straight week and also looks as though it may continue to test the highs of the year.

Commodities

Grains markets continued with recent strength with new all time highs being reached on Friday before the markets slipped back again. The drought in the U.S. that is behind these price moves is still very much underway. Reports show that a sixth of this year’s Corn crop has been destroyed just in the month of July, the hottest month on record in the U.S.  Corn actually hit new all time highs on Friday before reversing that move and closing on the low of the day to end the week slightly lower. Following Friday’s pullbacks it remains to be seen whether we have seen the top of these markets. For now the up-trends are very much intact.

Gold remains in a long-term downtrend but has risen this week and is now moving towards the top of the recent trading range. A break above $1650 may lead to a test of the 200 day moving average and a possible continuation towards the $1700 level.

Coffee has broken lower again, continuing weakness from the rounded top formed in July and may head down towards the lows of the year, around the 15300 level on the December contract.

Currencies

The dollar index managed a small gain for the week having recovered from weakness seen on Monday and Tuesday. The long-term trend is up and support looks to be forming around 8200 in the short-term.

The Canadian dollar continues to lead the way, having pushed the U.S. dollar further down away from parity. The April lows still look to be the next target.

The Euro managed to clear the 50-day moving average but was unable to stay above it and push higher. The long-term downtrend remains in place and we may see further weakness down towards the recent 2 year lows.

Interest rate futures

Interest rate futures took out the next level and continued lower before new support was found, enabling the markets to recover much of the week’s losses. As before the long-term uptrend still remains in place and further weakness will be required for a change of trend to down.

Good trading

Phil Seaton

www.LSTrader.co.uk

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