The past week has been quite a volatile one with some large moves seen in stocks, commodities and currencies. Much of the losses incurred by these declines were almost completely erased by the end of the week and some markets made a complete recovery and actually ended the week higher.
Long-term trends are still up for stocks and still mixed for the dollar and commodities.
We wrote last week that momentum on the S&P 500 may be running out of steam and right on cue weakness came in to the market, taking the market out of the recent bull channel and bring to an end the recent rally. The correction was however short lived and the S&P 500 made almost a complete recovery by the end of the week and is now only a few points off recent highs.
The Nasdaq 100 was not immune to early weakness but it did make a complete recovery and even went on to make new highs, albeit narrowly, and completed a tenth straight week of gains. However, in spite of making new highs and a new high close it’s not all bullish for the Nasdaq as there is a formation of a dragonly doji/hanging man pattern on the weekly charts, which is a bearish sign for the short term. It would not therefore be surprising to see a new test of last week’s lows in the not too distant future.
April Crude moved around a bit during the week but did end up with an advance of 0.66%. Upside resistance is in at the local top at $110.55 but if the market can reach and clear that we would be looking at a further rise towards last year’s highs at $114.
Soybeans continued in bullish fashion until Friday where we saw some weakness. It’s been a very strong move of late so some selling pressure is not all that unusual and an further rise towards 1450 is still a possibility but we may see some further weakness in the short term prior to that.
Metals all ended the week lower but the whole sector had been significantly lower earlier in the week and the weekly charts show long lower shadows on many of the metal charts, which is bullish. The trend remains mixed for metals with the long term trends being up for some but still down for gold. Gold is currently grappling with the 200 day moving average but a move above 1800 will be required for a confirmed change of trend to up.
The dollar index advanced for the second consecutive week, this time gaining 0.78%. This move was once again facilitated by advances against the ended the Euro, Pound and Japanese yen. We wrote last week that we were still looking for a move higher to 8200 in the USD/JPY and that should that level be taken out that 8500 would come into focus a nd that is the case now since 8200 resistance was cleared on Friday.
Respective resistance levels at $1.35 and $1.60 for the Euro and the Pound continue to look like a short term top and the failure to take out those levels has pressured both markets lower and downside breakouts look to be on the cards for both markets, with a $1.52 target for the Pound and $1.27 for the Euro.
Interest rate futures
Interest rate futures all ended the week lower but all continue to hold on to medium term support. The 5 year note formed a hammer pattern at support, which is a bullish reversal pattern, indicating buyers are trying to hammer out a bottom and push prices higher once again. As we wrote last week, we may 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.