Weekly Update – 18 March 2018 – LS Trader

This week sees the FOMC Meeting with the Fed expected to raise rates in their announcement on the 21st March. This rate increase is already priced into the markets.

Overall, it’s been a quiet week in the markets, but things will likely pick up this week around the time of the aforementioned Fed announcement on Wednesday.

Stocks

The Nasdaq 100 began the week with strength as expected, printing a new all-time high on Wednesday at 7214.5 on Tuesday before pulling back for the rest of the week. The decline below the prior January high has bearish implications so we may see further weakness this week, but for now, the trend is still clearly bullish, and the market is above support.

The S&P 500 also began the week with strength but was unable to continue the rally. Volatility has declined sharply since late January. Friday saw a narrow range 7 bar printed, which is a good setup for a low volatility breakout in the direction of the open on Monday. The long-term trend remains up

Commodities

From last week: “Brent Crude has been trading in a symmetrical triangle pattern since late January….The long-term trend remains up, so the odds favour a breakout to the upside.” Support from the triangle held exactly, and we saw a breakout of the triangle on Friday, which suggests further strength ahead. The trend remains up.

Gold looks set to test the recent low, which if broken would have the downtrend back in effect with room for further declines down towards the mid-December low around $1240. Weakness is evident in all the metals markets at present. Silver is also close to a downside breakout. Silver is the weakest of the metals as it never completed a change of trend to up when the rest of the sector did.

Currencies

The currency markets remain quiet for the most part, likely waiting for this week’s Fed meeting before making their next move. The long-term trend continues against the dollar.

The weakest currency at present is the Canadian dollar which is back at levels not seen since June last year. The dollar rallied from support this week and ended the week higher by 2.2%.

Interest rate futures

The shorter-term markets remain the weakest in the interest rate futures sector. The long bond rallied to its highest level in over a month this week but pulled back on Friday. The long-term trend remains down across the sector.

Good trading

Phil Seaton

LS Trader

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