LS Trader Weekly Update

On the whole it’s been a volatile week for most markets with some large swings seen in commodities and currencies. The long term trends are still unaffected though with the trend still up for stocks and commodities and down for the dollar. It will take some fairly significant moves in these markets for a long term change of trend to take place, so last week’s moves will likely be viewed as short term corrections.

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The LS Trader System Weekly Update

Stocks

The stock markets gained for the week and the S&P 500 finally closed the week out above 1100. The Dow 30 tested the 10500 level, posting a new high for the year at 10510 before closing the week out at 10400.

The Asian markets reversed and buyers returned to the Nikkei at support levels just over 9000. The Nikkei ended up with a 10.9% gain for the week and may now be headed back
towards contract highs at 10690. The Hang Seng also advanced sharply, gaining 5.85% for the week, which erased the heavy losses from the previous week.

The long term trend remains up for the stock markets on the whole and this is normally a strong period of the year for stocks so we may see moves higher between now and the
end of the year.

The VIX erased the previous week’s gains and looks to be headed back towards lows for the year at 20.10 as complacency remains in the markets.

Commodities

Gold had a wild week having first cleared the $1200 level with ease and setting new all time highs in the process at $1227.50 on Thursday. Then Friday came and we saw a very steep sell off with gold declining all the way to $1147 before recovering to close the week slightly down at $1169.50. In spite of the dramatic sell off the trend is very much up for Gold and we will remain bullish as long as support above $1100 holds.

The energy markets returned to their recent trading range with Crude oil spending the week between $75 and $80. Both of these levels look to be the key to short term direction if either level can be decisively cleared to take the market out of the current consolidation. The long term trend remains up for the energy markets with the exception of Natural Gas. Natural gas continued its recent decline, dropping by 11.67% for the week and posting new contract lows in the process.

Currencies

For the first time in a while the dollar index failed to make a new contract low and moved higher from support just above the 7400 level. The long term trend is clearly still down for the dollar and Friday’s sharp move higher was likely a bear market rally. It will be interesting to see the reaction of the market next week, especially in terms of the Euro, which sold off sharply having been clear of the $1.50 level earlier in the week. There is clearly very strong resistance to the upside for the Euro at $1.5144.

The Japanese Yen had a sharp reversal and declined against the US dollar and the British pound. It remains to be seen whether this sell off was just a correction or is going to lead to a longer term change of trend. The long term trend for the Yen is still up against both the Pound and the dollar.

Interest rate futures

Interest rate futures reversed sharply with all the markets falling for the week in a counter trend move. The trend is still up for this sector and recent support levels may be tested soon.

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Kind Regards

Robert Stewart