Weekly Update 9 July 2017 – LS Trader

The past week was a shortened trading week due to the Independence Day holiday in the US on Tuesday. Trading volumes have been fairly light as expected. The big moves have come in the current markets where we have seen considerable strength in the grains markets and weakness in metals and energies.

Stocks

The S&P 500 closed below the trend line that we referred to last week but continues to find support at the 50-day moving average. The RSI is also finding support above the 40-level and therefore remains in the bull range, and the long-term trend remains up.

The Nasdaq 100 ended the week flat but has now closed for six straight sessions below the 50-day MA. Price movements in the Dax are very similar to the Nasdaq 100, where price remains between the 50 and 200-day MAs.

The Nikkei, which has been the stronger of the indexes inasmuch that it has held up better than other global indexes also succumbed to weakness this week by breaking short-term support. Support has so far been found at the 50-day MA.

For now, the long-term trend remains up for all global indexes that we trade at LS Trader.

Commodities

From last week: “Price is now below the third fan of a 3-fan principle set up which may lead to a decline all the way back to the ‘V’ bottom printed back in December, at $1133 basis the back-adjusted continuous contract, in other words, around $110 below current levels.” Gold continued to decline this week as expected and is on the cusp of a change of long-term trend to down. The RSI has moved decisively into the bear range.

Silver also declined this week, which included a spike move lower on Friday which saw a sharp drop to 1434, before a recovery to close at 1542.5, down 7.22% for the week. The long-term trend remains down for Silver.

The energy markets ran out of steam in the vicinity of their 50-day MAs, and have turned lower again. The prospect of new lows remains in place.

The grains markets have seen some very large moves and volatile price swings. Wheat rallied from 463.5 two weeks ago to 574.5 on Wednesday before falling back to close the week at 535. The Soybeans complex has also seen bullish trade, as the grains complex continues to build a bottom.

Currencies

The currency markets continue to be mixed. The long-term trend on balance remains down for the dollar. The Dollar Index itself is trading just above its lowest levels in a year, having closed the week up by 0.39%.

The Euro dipped in midweek but recovered by the end of the week, but so far remains unable to cross the 1.15 level, which markets a considerable resistance zone. If resistance can be decisively broken, we could see further strength towards the area of the 200-week MA, currently at 1.1849.

The Canadian dollar continues to rally against the US dollar and rose this week to its highest level since September last year.

Interest rate futures

Interest rate futures have seen persistent weakness for the past two weeks. The long bond has this week fallen and closed below its 50 and 200-day MAs, and the RSI has also fallen through bull market support at the 40 level. These are not bullish characteristics, at least in the neat term, and price finds itself back to the middle of the range that has been in place since December last year.

The UK Long Gilt has seen sufficient weakness to bring a change of long-term trend to down within range, and we could see a change of trend completed over the coming week or so.

Good trading

Phil Seaton

LS Trader

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