Weekly Update 28 May 17 – LS Trader

The week ahead will be a shortened trading week due to the Memorial Day holiday in the US and the Bank Holiday in the UK.

The past week has seen US stocks print new all-time highs but has seen mixed trading in other asset classes. Commodities markets have been particularly weak with multiple markets extending their recent declines to new lows for the current move.

Stocks

US Stocks resumed the uptrend and rallied to new all-time highs. Price has rallied for seven consecutive days following the sharp decline seen back on the 17th May. That large black candle on the 17th was a high volume bar and therefore a key footprint in the market. The fact that the market was able to reverse and trade above that bar is a plus on the side of the bulls, as is the fact that the decline never broke the 40 level on the RSI, which is bull markets support. The RSI also broke back above 60 on Friday/

The negative is that volume has been declining as the rally has progressed. Fridays’ doji on the daily S&P 500 e-mini chart also suggests some indecision. Nonetheless, all-time highs are bullish, and the trend remains up.

Lean Hogs has had a good week, breaking decisively above key resistance to reach its highest level since July last year. Other commodities such as Coffee, Orange Juice, Sugar, Soybeans and Soybean Meal all fell to their lowest levels of their current moves as multiple commodity markets remain in long-term downtrends.

Commodities

The energy markets had been pushing tentatively higher until Thursday where a very large reversal bar was printed on the daily charts. This decline was partially recovered on Friday, but the energy markets are now back to the middle of their trading range. The long-term trend remains down.

The weakest market in the sector is Natural Gas, which has been trading in a box range for the past two months and is now trading just above support. Both recent rallies have been unable to take out bear market resistance on the RSI and the 200-day moving average.

Currencies

The dollar index fell to a new low for the current move on Monday but has been trading sideways to slightly up for the remainder of the week. The long-term trend is down for the dollar.

The Euro, which moves inversely to the dollar index, made new highs for the move on Monday and Tuesday but fell just shy of the 1.13 mark before trading lower for the rest of the week. The trend remains up, and the market is quite well above support.

The British Pound has had a poor week, trading lower every day and breaking support and is now trading at its lowest level since 21st April.

Interest rate futures

US Interest rate futures tested support but just about managed to hold on. All markets in the sector remain in long-term, uptrends, but price action is far from convincing. The increase in volume seen over the past few days is due to the rollover to the September contract.

The UK Long Gilt was the strongest of the interest rate futures sector, rallying to exceed their April highs and reaching their highest levels since September last year.

Good trading

Phil Seaton

LS Trader

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