Weekly Update 17 December 2017 – LS Trader

US Stocks have made new all-time highs once again this week as the global bull market remains in effect. There were a few breakouts this week in various commodities markets as volatility continues to awaken. This week is likely to see declining volatility as the week progresses, but watch for the Santa Claus rally in stocks towards the end of the week.

Stocks

New all-time highs were seen in US stocks as expected as the bull markets continue. While many people have been trying to call a top in stocks for most of the past couple of years the fact remains that there has never been a reason to be short. The 200-day moving average has been sloping upwards since March 2016.

As for a measure of strength and momentum, this week’s closing RSI value at 85.48 is the highest in decades. I had to go all the way back to January 1959 to find a higher reading, which is only two years after it expanded to its present 500 stocks! Things aren’t quite so bullish for the S&P 500 at daily chart level as we have some bearish divergence.

The Nasdaq 100 traded in a similar fashion to the S&P 500 and also made new all-time highs. In fact, the current trend in the Nasdaq 100 has been the biggest bull move in history in terms of points, and there is nothing on the chart to suggest that move is over.

International stock indexes lag the US markets, but the Nikkei could be gearing up for a new breakout after Friday’s reversal from fair value. The Dax is currently finding support at the 50-day moving average.

The trend for global stocks remains firmly up, and new highs still seem to be the order of the day. It’s going to take a decent-sized downside break in any of the four stock indexes that we trade at LS Trader to even think about a short trade. The long-term trend is likely to remain up for some months yet. Watch for the Santa Claus rally, which usually brings a respectable rally during the last five trading days of the year and the first two of the New Year. This year that starts on Thursday 21st.

Commodities

Gold came within points of a change of long-term trend to down but then reversed, narrowly keeping the long-term uptrend intact. Silver, which is already in a confirmed long-term downtrend, fell to a slightly new low for the current move before bouncing higher along with Gold.

Cotton made an upside breakout, reaching its highest level since May and completing a change of long-term trend to up. There is plenty of chart space for further strength as the next level of structural resistance does not appear until the 85.00 area.

Brent Crude made the expected breakout and new high but then reversed sharply but held above support.

Currencies

The US dollar has had a mixed week again but appears to be on the verge of at least a couple of breakouts, most likely against the Canadian dollar. The market has tested resistance in October and November but has yet been unable to punch through. That could happen this week. With volatility at low levels, there is potential for an extended move should the breakout prove successful.

The Dollar Index itself is trading within a fairly narrow, but important range, between support around 92.00 and resistance around 94.70. A break of either level should yield a decent move. For now, the long-term trend remains against the Dollar Index.

We’ve written in previous years about the tendency for the Euro to make its high or low for the year in January, and that held true once again in 2017. We’ll have more to say on this in the coming weeks as we look for the same pattern in 2018.

The December currency futures went off the board this week and rolled to March.

Interest rate futures

Interest rate futures remain in a long-term downtrend with the shorter-term markets still the weakest. The three month Eurodollar and 5 Year T-note lead the way to the downside.

This week, the 10 Year T-Note tested support almost to the tick but found support. We could see support tested again this week. The long bond remains the strongest in the sector and may test short-term resistance this week.

Good trading

Phil Seaton

LS Trader

Share and Enjoy:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • LinkedIn
  • Live
  • Reddit
  • StumbleUpon
  • Tumblr
  • Twitter
  • Yahoo! Buzz

,

Comments are closed.

Switch to our mobile site