Weekly Update 16 July 2017 – LS Trader

U.S. stocks have recovered this week as the S&P 500 printed a new all-time high. The Dow 30 also made new all-time highs. The Nasdaq 100 has also rallied to within range of new all-time highs and could complete the treble this week. Other global stock markets continue to lag.

Stocks

From last week on the S&P 500: “The RSI is also finding support above the 40-level and therefore remains in the bull range, and the long-term trend remains up.” The S&P 500 completed its recovery to push to a new all-time high and new all-time high close on Friday.

The Nasdaq 100 currently lags the S&P 500 and failed to print a new all-time high this week. However, price is now close enough to the local top to suggest that may happen this week. The RSI closed at 59.99, just a tick below the 60 level, a decisive break of which would be bullish. Volatility has also started to increase, but volume remains subdued.

Commodities

Silver’s collapse and recovery on the 7th July may turn out to be a blow-off bottom, but prices have yet to exceed the high of that bar and reenter the prior trading range. If they do, the downtrend is likely to be over or on hold. If resistance can hold firm at these levels, then lower prices may follow.

Silver’s recovery has seen similar price action with Gold, which has held just above key long-term trend defining support. A move below $1200 would be bearish, especially on a closing basis. The RSI remains bearish for Gold and volatility has contracted during the 5-day rally, suggesting that the rally is weak.

The grain markets underwent as substantial correction this week, largely due to a change in the weather from hot and dry, to unexpected thunderstorms. There is an old saying from the Chicago Board of Trade (CBOT) that ‘Rain makes grain’. Prices did recover some of the declines on Friday, and the trend remains up.

Currencies

The Euro crossed the 1.1500 level for the first time this year, and possibly significantly, closed the week above it basis the September contract. Further strength this week could see additional rally towards the area of the 200-week MA, over the coming weeks.

The Australian dollar decisively broke out of a rectangle that has been in place since April 2016. The upside target is in the vicinity of the 8400 level. The Canadian dollar continues to rally against the US dollar and rose this week to its highest level since September last year. The weakest of the commodity based currencies, the New Zealand dollar, still managed to reach a 6-month high.

The British Pound continues to shrug off Brexit and a huge amount of political uncertainty and has rallied to its highest level since September last year. There are a couple of technical patterns that suggest there is further to run, which generate targets between 1.33 and 1.3450. The RSI has cleared the 60 level, closing at a bullish 64.49, and price is also above prior resistance, as well as both the 200 and 50-day MAs. With the long-term trend remaining up, the technical picture continues to support the Pound.

Interest rate futures

Interest rate futures continue to consolidate in the area of the 200 and 50-day MAs. The long-term trend remains up for the sector, but price action is currently neutral.

Good trading

Phil Seaton

LS Trader

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