LS Trader Weekly Update

Stocks have held up well in spite of strength in the US dollar and may well test new highs for the year this coming week. For now the long term trends are as we were with trends are up for stocks and commodities and down for the dollar.

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The LS Trader System Weekly Update

Stocks

The S&P edged slightly lower for the week with the March contract closing just below the 1100. The Nasdaq 100 pushed up through 1800 and closed at 1807. This coming week normally brings with it the Santa Claus rally in the stock markets which usually runs for the last 5 trading days of the year through to the first 2 trading days of January. Since 1950 this rally has produced an average gain of 1.5% over the 7 trading days. We may therefore see new highs in the stock markets between now and Tuesday 5^th January.

Volatility Index (VIX)

The VIX ended the week slightly higher but is still at very low levels and remains just above the lows for the year. This reading shows that the stock markets (S&P 500) are quite comfortable at the current level at the moment.

Commodities

Gold briefly pushed through support at $1100 before moving slightly higher to close Friday at $1111. Support at $1100 remains the level to watch but failure here could lead to a decline back to $1050. In spite of the current correction the long term trend is still up for Gold as it is in all the metals.

Crude oil snapped a run of weekly declines and finished the week 4.99% up having earlier posted new contract lows at $68.59. The long term trend is still up but the market is in a range between $68.59 and $79 at present.

Natural gas continued the counter trend rally and has reached its highest level in 8 weeks. The long term trend remains down for Natural gas but this may change soon if recent strength continues.

The soft commodities sector continues to do well with another good week for Sugar, which broke out to new highs for the year again. Cotton also reached new highs for the year but pulled back slightly by Friday’s close. The trend is firmly up in the softs sector and these markets are currently outperforming the other commodity markets.

Currencies

The dollar index moved higher again, moving to its highest level since early September and taking out the 7800 level that we mentioned last week. It remains to be seen as to whether this is a bear market rally for the dollar or will continue to push on for a change of long term trend.

The British pound continued lower and may still be headed towards October lows at $1.57. The Swiss franc also continued its sell off but support came in at just over the 9500 level that we mentioned last week.

The Euro continued lower through support at $1.46 and also fell through support at $1.44 level. The 4 straight days of declines that we have just seen may ease early next week and strong support at $1.42 may be seen. If this level fails then a prolonged downtrend for the Euro may be on the cards which may last well in to January.

Interest rate futures

Interest rate futures continued to head lower and took out support levels bringing an end to the recent uptrend. The markets moved higher off the lows for the week to end the week flat. The long term trend is still up in this sector.

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Kind Regards

Robert Stewart