Weekly Update 30 October 2016 – LS Trader

Stocks began the week with some strength but fell away as the week progressed. The dollar index reached its highest level since March, but the dollar itself continues to see mixed trading against most of the majors. Interest rate futures could be on the verge of a breakdown and change of trend to down for the first time this year.

Stocks

The Nasdaq 100 rallied to a new high on Tuesday but was unable to press higher as buying volume failed to materialise. A swift reversal followed, taking the market back to the 50-day moving average. The trend remains up, but the increase in volume as the market declined suggests weakness may continue next week.

The S&P 500 remains considerably weaker than the Nasdaq 100 and did not come close to breaking out to new highs. Price remains between its 50 and 200-day moving average. A test of the next level of support at 2100 could be key. If that level is tested and broken, we may see further declines.

The Dax reached a new high for the year on Tuesday but, as with the Nasdaq 100, was unable to push higher. Price fell back to just above the 50-day moving average on Friday, before reversing higher. A strong demand tail was seen on Friday, which has kept the uptrend intact.

Of the four stock indexes that we trade at LS Trader, the Nikkei has been the strongest this week. Price has rallied to its highest level since April, and the RSI has risen further into the bull range. The Nikkei benefits from a weaker Yen, and the Yen has seen weakness this week, having fallen to its lowest level since July.

Commodities

The energy markets retreated this week. Crude fell back below its 200-day MA and closed on the 50-day MA. The trend is still bullish for the energy markets for now, and the RSI remains in the bull range. However, we may see the 40 level tested on Crude’s RSI this week.

Oats completed a fifth consecutive week of rallies to reach its highest level since December. Volatility has become elevated, and there was a huge price rejection on Friday. The trend, however, is now bullish.

Coffee rallied to its highest level since February last year and did so on above average weekly volume. Price may continue higher to test the area of the 200-week moving average, currently at 172.27.

Copper found support at the trend line that we wrote about last week and rallied sharply. Gold and Silver also moved slightly higher for the week, keeping the long-term uptrend intact for now.

Currencies

The dollar has had another mixed week. The dollar index reached its highest level since March but has so far been unable to press higher. The trend remains up for the dollar index.

The British Pound continues to consolidate in a narrow range, just above the key recent lows, as it has for the past few weeks. The long-term trend remains very much down for the Pound.

Interest rate futures

Interest rate futures fell this week and look to be on the verge of a breakout to the downside and a change of long-term trend. The long bond moved decisively below its 200-day moving average this week, and the RSI fell to 31.97, well into the bear range.

The shorter-term markets have held up a bit better. The 5-Year T-Note barely managed to hold support and close above its 200-day MA.

For now, the trend is still up for the sector, but that could change this week.

Good trading

Phil Seaton

LS Trader

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