Weekly Update – 8 April 2018 – LS Trader

Volatility in stocks has continued. The S&P 500 has closed right on its key 200-day moving average and remains perilously positioned above MA support and the February lows. For now, the trend remains up, but that picture could quickly change.

Stocks

US stocks ended the week lower and had big down days on Friday. For now, the long-term trend remains up but key trend-defining support are within range of being tested this week, and it’s possible that we could see a change of long-term trend to down completed in the next week or so.

The Dax finished the week higher by 0.49% but remains in a long-term downtrend, and the same can be said for the Nikkei. At present, the long-term trend remains up for US stocks but down for international stocks.

Commodities

The grains markets had a volatile week this week on speculation of tariffs affecting a few markets in the sector. However, the markets quickly shrugged that off and price action was strong on Friday. The long-term trend remains up, and we could see Corn and Soybean Meal breakout to the upside this week.

The energy markets have continued to decline this week, but for now, the long-term trend remains up for the sector.

Lumber resumed its long-term uptrend by breaking out to new all-time highs this week and could yet have further to run.

The metals markets remain mixed. Palladium has closed the week lower for six consecutive weeks, and for ten of the last twelve weeks. Silver remains in a long-term downtrend and is trading near support with a breakout to the downside possible. According to COT data, the small speculator as the most bullish it has been since 2009. Lasting rallies rarely commence when the small speculator is more bullish than commercials and large speculators.

Currencies

The Dollar Index has continued to make its counter-trend move but is at medium-term resistance, with the long-term trend remaining down. The area around 90.50 is significant resistance for the Dollar Index as that level represents change of polarity resistance from the September 2017 lows and also the high of this year.

The inverse, of course, is true for the Euro, which is now testing key support.

Interest rate futures

From last week: “The long bond is now in the zone between the 38.2 and 50% retracement levels of the decline from the December high, which is about the level that normally sees a correction of this degree fizzle out. The 50% retracement level is at 147.37.” The long bond turned lower at the expected resistance zone and traded lower until Friday. The long-term trend remains down for the sector.

Good trading

Phil Seaton

LS Trader

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