Weekly Update 17 Sep 17 – LS Trader

The past week has seen mixed trading in the markets with the S&P 500 printing new all-time highs as the global bull market in stocks continues. The dollar’s weakness remains intact, but support and resistance levels in the currency markets have both been tested this week. The big currency move came from GBP/USD, where the British Pound rallied to its highest level since Brexit.

Stocks

The S&P 500 printed a new all-time high this week, reaching 2500 for the first time as global stocks remain bullish. The Nasdaq 100 has rallied back to within range of its most recent all-time high, posted on the 1st of September and we may see new highs again this week.

The Dax, which has been the weakest of the four stock indexes that we trade at LS Trader, and so far the only one of the four to complete a change of trend to down, has seen a fairly impressive 70 point rally over the past few weeks. However, this rally appears to be losing momentum right at the 61.8% retracement of the decline from the 20th June all-time high.

Commodities

The metals markets have seen weakness this week. We exited Copper and Palladium for profits as both trades breached support and exited as expected. Gold has pulled back to test support and so far support has held, but it looks likely to be tested again this week, especially since the 60 level on the RSI has been breached. The uptrend for metals could be coming to an end, at least for now.

Currencies

The British Pound shot higher this week following a successful breakout. The rally this week took the Pound to its highest level since Brexit. The RSI rose to 76.7, a level not seen since September 2013. The rally has occurred on well above average volume, but some of that will be due to quarterly contract expiration as September went off the board on Friday and rolled to December. The next target is 1.3835.

The short dollar trade, which has been under a bit of pressure for the past two weeks is just about clinging on. The dollar index was moving close to resistance on Thursday but turned lower once more and is now within range of testing the recent low at 91.15. The Euro has seen almost perfectly inverted trade to the dollar index and bounced off support on Thursday. The long-term trend remains against the dollar.

Interest rate futures

Interest rate futures were weak across the board this week, and the uptrend appears to be over for now. The long-term trend is, however, still up.

The 3-month Eurodollar has seen very bearish price action this week and has seen five consecutive selling days since the doji printed on the 8th. This has taken price below the 50 and 200-day Has and has also seen the RSI drop below the 40 level, which is bull market support, for the first time since early July. This indicates that we may see additional weakness and possibly a change of long-term trend to down over the coming weeks.

Good trading

Phil Seaton

LS Trader

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