Weekly Update 26th March 2016 – LS Trader

The past week was a shortened trading week due to the Good Friday Holiday. Monday is a Bank Holiday in the UK, but US markets will be open as normal.

It has been a good week for the dollar, which has advanced against the major currencies this week. Stocks have moved lower, and commodities remain mixed, but there continue to be signs that the commodity bear market may be reaching an end. Several commodities have already moved into an uptrend, and a handful have a change of long-term trend to up within range.

Stocks

The S&P 500’s bear market rally may finally have run out of steam this week. Having reached its highest level since late December, the S&P 500 rolled over into the long holiday weekend. Based on LS Trader’s proprietary algorithm, the long-term trend is still down for the S&P 500, as indeed it is also for the other stock index markets that we trade.

Similar price action has been seen in the Nasdaq 100, where the price is also above its 200-day moving average. Here the RSI is also above the 60 level, having closed at 61.36. If this trend still has legs, the RSI should find support around the 60 level, and the 200-day moving average should also provide some support. If both of these give way this week, the rally may have already run its course.

The Dax continues to find resistance at the 60 level on the RSI, which suggests that the rally here too is running out of steam and that the market may turn lower again over the coming weeks. Unlike the S&P 500, the Dax has not even rallied sufficiently to test its 200-day moving average.

The Nikkei 225 remains the weakest of the four indexes and the most likely to turn lower first. The Japanese index remains below both its 50 and 200-day moving averages, and the RSI remains in the bear range.

Commodities

Gold moved lower this week and fell below short-term support in the process. We may see further weakness this week that sees the yellow metal test its 50-day moving average, and also the RSI may test the 40 level, which is bull market support. If the long-term focus for gold is correct, we should see the RSI find support around the 40 level and price move back higher again.

Silver spiked to its highest level since October last year but then turned sharply lower, closing back below its 200-day moving average. In spite of the rally seen since the start of the year, the long-term trend is still down for silver.

Currencies

It’s been a good week for the dollar, which has recovered against some of the majors. However, the long-term trend is still against the dollar versus nearly all the major currencies.

The dollar does remain in a long-term uptrend against the Pound, and we may see further weakness for the Pound over the coming week or so. The RSI has been unable to break above the 60 level, and, therefore, remains in the bear trend, so a test of the February low at 1.3840 looks very possible.

Interest rate futures

The long-term trend for interest rate futures remains up. This week has seen the interest rate futures markets consolidate around their respective 50-day moving averages. All the markets in this sector are above their 200-day moving averages, and the RSI in each is above the 40-level, which is bull market support.

Good trading

Phil Seaton

LS Trader

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