The past week has seen stock indexes continue to climb higher but there are signs that momentum may be beginning to wane. The dollar has also advanced for the week overall and commodities have been mixed. With a few exceptions volatility is at much lower levels than it has been for much of the past 2-3 years and many markets are trending well.
Long-term trends are up for stocks and mixed for the dollar and for commodities.
The S&P 500 advanced by 0.40% for the week and the trend is clearly still up. However, there are signs that the momentum may be running out of steam. The bull channel that we have been writing about for several weeks is just about holding on a closing basis but the market is right on that lower trendline as of Friday’s close. If the lower level holds then we may yet see a move back towards t he top of the channel and the 1385 target.
The Nasdaq 100 continues to lead the way as far as the indexes are concerned with this past week being the ninth straight up week, for a weekly gain of 1.61%. The weekly chart still looks bullish but the daily charts are showing some indecision with a northern doji printed on Friday.
April Crude cleared $110 on Thursday before pulling back on Friday but the trend remains up and it was a similar story for heating oil and no leaded gas. The trend remains up for all three markets at present but it remains to be seen as to whether last week’s weakness translates to a stronger pull back. Last week’s highs in all three markets will be the resistance levels that will need to be cleared.
Last week we wrote about the indecision that was present in gold and that was clearly resolved this past week with a steep sell off on Wednesday, whi ch took the market easily through he $1765 support area. The long term trend remains down but last week’s lows may provide support, as may the 200 day moving average which currently sits at $1765. Silver ended up sharply lower also on Wednesday but the trend still remains up.
Soybeans had a very bullish week, moving ahead 3.59% for the week for a third consecutive week of gains. The soybeans chart still looks bullish with little in the way of resistance between current levels and the September highs around 1450.
The dollar index ended the week higher by 1.35% helped mainly by gains against the Euro, Pound and Japanese yen. We wrote last week that we were looking for a move higher to 8200 in the USD/JPY pairing and that level was almost reached this last week. If that resistance level can be cleared there is little in the charts by way of resistance until around the 8500 level.
Both the Euro and the Pound made sharp reversals lower having been rejected at $1.35 and $1.61 respectively. The long-term trend remains down for both of these currencies and lower prices may be ahead.
Interest rate futures
Interest rate futures continue to hold on to medium term support and both the 5 & 10 year notes advanced but the longer term 30 year bonds ended slightly lower. The long-term trend is still up across the sector and these markets must still be considered bullish as long as medium term support holds. We may however see some decent moves lower should those support levels eventually give way but for now a continuation towards the higher end of the recent ranges looks more likely.