Weekly Update 17 November 2014 – LS Trader

The S&P 500 printed new all time highs on Thursday at 2043.75 basis the December e-mini contract. The dollar index also printed a new high for the current move on Friday before reversing. We also saw a few corrections in other markets, which we had indicated would likely happen in last week’s update where we wrote: “Some of these moves may be reaching extreme levels in the short-term and some corrections could be due.” We also added that the longer-term trends in all instances still likely have longer to run, which still holds true.

Stocks

The S&P 500 made a new all time high of 2043.75 on Friday basis the December e-mini contract. However, the rise over the past week has been anything but impulsive and a fair description would be that the market is rising in agony! The RSI remains bullish and did in fact move slightly higher, ending the week at 67.43 but the daily chart does show a slowing and a general rolling over of price action. However, we’re still in bull market territory and both the long and short-term trends remain up.

The Nasdaq 100 posted new multi-year highs once again this week. From last week’s update “In both the Nasdaq 100 and the S&P 500, if these trends are good, prior resistance formed at the September highs should now become support.” In both markets these levels have held and they remain the key levels for both markets in the days ahead.

The Nikkei held the prior week’s low and support there provided the platform for a 5-day rally back to new 7-year highs. Here though we have clear bear divergence on the RSI but the RSI is back above 70 so is still bullish. The trend is clearly still up and with the Yen still falling the rally could still have further to run.

Commodities

Gold and silver both continued with short-term strength from the reversal that we had pointed out in last week’s update. The rally was sufficient to bring the trend to an end for gold for now, but has not as yet been sufficient to terminate silver’s downtrend. Continued strength however may change that early next week. It’s possible that both of these corrections have further to run over the next week or so but ultimately the long-term downtrends remain intact and we may yet see new lows.

The energy markets continue to provide the biggest trends at present, with the most profitable energy trade for the LS Trader system being the short Brent crude trade. We’ve been short Brent crude since the 14th August and currently have 2545 spread betting points profit on the trade. Crude oil and no leaded gas have also been excellent trades, with 1286 and 3109 points profit respectively as at Friday’s close. Each of these markets did put in a sizable one-day reversal on Friday but nothing that would be considered to dent their respective downtrends. Even following this one-day reversal, the RSI on Brent has only risen to 29.23, still very much in the bear range. Further correction may be seen over the coming week but the long-term trend remains down across the board.

Currencies

The Yen weakened to levels not seen since October 2007, which correlates almost exactly to the Nikkei, which has risen to levels not seen since the same period. As we have written many times before, these two markets are almost a perfect inverse correlation, so Yen weakness equals Nikkei strength. Both markets could still have further to run having already reached 7 year+ extremes.

USD/JPY is by far the most profitable of the current open currency trades for the LS Trader system, with some 613 pips profit since we entered the trade back on the 31st October.

Interest rate futures

Interest rate futures remain in a long-term uptrend. The decline from the spike high in October still looks corrective. The RSI has remained in the bull market range and strength over the coming weeks to test the October high may yet be seen. As yet there has been no confirming price action but the long-term trend is up and the RSI remains in the bull range for all 5 interest rate futures that we trade at LS Trader.

Good trading

Phil Seaton

LS Trader

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