Stocks and the dollar ended the week fairly flat as both for the most part remained in relatively tight ranges. Commodities were much more volatile with large moves being seen in several markets, especially the energy sector.
The long-term trends are still up for stocks and mixed for the dollar and commodities.
Stocks ended the week marginally lower at the end of expiration week as September futures rolled in to December. The S&P 500 December contract ended lower by 0.49% for the week but is still clearly in an uptrend. The upside target remains in place at 1500, which would represent new multi-year highs.
The December Nasdaq 100 was slightly more bullish, advancing 0.08% for the week and making new 11 year highs once again. The trend is clearly still bullish. The Dax also advanced to new highs for the year, but the Nikkei, the only index still in a long-term downtrend ended lower. However, the trend for the Nikkei could change to up should new highs for the year be reached.
Gold closed the week higher by 0.3% and continues to edge towards our target at $1800. Friday’s close was marginally above a long-term sloping trendline that has held since November 11. That trendline may now provide support and a test of resistance around $1800 now looks likely.
Silver ended the week flat and is consolidating at present. The trend is up and the target remains at 3800.
The grains bull market appears to have come to an end at least for the immediate future. Soybeans ended the week lower by some 6.74%, bringing the current trend to an abrupt end. Soybean meal ended lower by 7.5% for the week as the two best performing markets, both of which have been highly profitable to trade, declined along with other grains markets.
Big moves also were seen in the energy sector as Crude oil ended the week lower by 6.48%. U.S. Crude, the weakest of the energy markets fell through support and now resumes the downtrend. No leaded gas and heating oil were also sharply lower but did recover some of the declines by the end of the week.
The dollar index ended a run of 4 losing weeks with a weekly gain of 0.52%. What is important now is that the market has risen back to a level that was previously major long-term support. Often in these circumstances prior support changes polarity to become resistance so it will be interesting to see how the index fares at this level in the week ahead.
The Pound reached our target of $1.63 but has since pulled back slightly, showing that $1.63 is still providing resistance. If that resistance can be cleared, especially on a closing basis then $1.67 will be the next target. The Euro was lower for the week and still remains in a long-term downtrend.
Interest rate futures
The long-term trend remains up for the interest rate futures sector and this past week has seen these markets move higher having sold off quite heavily in recent weeks. The lows from this past week and the prior week now look to be a good support level on the 30 year T-bond so we may see a continuation higher as long as that support area holds. However, if it gives way a change of long-term trend to down is likely.
The shorter term 5 & 10-year T notes are both stronger, with the 5-year notes not far from all time highs and still clearly in an uptrend. However, as we have written many times of late, the risk/reward here is not favourable for long-trades at present.