LS Trader Weekly Update 30th July

Stocks began the week on the back foot, but bottomed on Wednesday and a sharp rally followed, which took the S&P 500 to new highs for the current move. The dollar did the opposite, giving up initial gains from early in the week and ending lower.

The grains markets, which are still in a bull market fell back this week but the trends remain intact.

The long-term trends are still mixed for stocks and commodities but the trends in the currency markets are becoming less clear, but still on balance favouring the U.S. dollar.

Stocks

The S&P 500 pull back early in the week but found support once again just above the 1320 area, which formed a platform for an impressive rally which took the index to new highs for the current move.

The Nasdaq 100 moved in similar fashion but is not quite so bullish as it did not clear recent resistance and has subsequently not made a new high for the current move. The trend remains up for U.S. induces.

The Nikkei is still the weakest but even that managed to advance. Friday’s close was just below the 50 day MA but the momentum looks as though it will take it through the moving average and possibly to the recent highs. The long-term trend is still down.

Commodities

October Gold ended the week ahead by 2.23% but still remains range-bound and in a sideways consolidation that suggests it is building up for a breakout. The range is currently around $100 with support around $1550 and resistance around $1650. A break of either level could be good for a move of around $100 in the direction of the breakout.

We wrote that the grains markets are often very much weather driven so any sign of rain could send prices in to a sharp correction. This week did see some rain and prices corrected but still remain in the long-term uptrend and the bull market is still intact.

Currencies

The dollar index initially cleared our 8400 target but then pulled back to end the week lower by 0.97%. The long-term trends still mostly favour the dollar, with the exceptions being the Pound and the Canadian dollar.

The Australian dollar continues to rise and the trend looks set to change to up. The New Zealand dollar also advanced and that too may be on the verge of a trend change in the not too distant future as the commodity based currencies come back into favour.

The Euro fell to new 2 year lows on Tuesday but then put in a decent recovery, finishing the week ahead by 1.22%. The Euro now looks like it may continue higher towards the 50 day moving average. The long-term trend is still down.

Interest rate futures

We wrote last week that we thought there was limited upside potential in this sector and having clawed up to new all time highs early in the week, Wednesday saw the beginning of some serious selling that culminated in a large down-day on Friday that brought the trend to an end, at least for the short-term. 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

LS Trader

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