LS Trader Weekly Update

It’s been a very good start to 2010 with several markets trending well and some large moves being seen in a few markets, especially Orange juice. After the first week of the year the LS Trader financial spread betting system has gained 19% in just a single week, benefitting from continued moves higher in stocks and numerous commodity markets. This week we are entering 5 new trades.

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The LS Trader System Weekly Update Stocks

Stocks remain in very tight ranges as volatility remains at very low levels in the stock indexes. The S&P 500 advanced every day this week and is now at its highest level since October 2008. There is little in the way of resistance for the S&P until around the 1170 level so this extended bull market may yet continue higher. That said, this coming week is January expiration week and has been a poor week for stocks in 8 of the last 11 years. This same week in 2009 saw the S&P 500 shed 2.3%

The German Dax also reached new highs, as did the Nasdaq and the Nikkei, which may be headed for a test of 11000 this week. If 11000 can be taken out then there is the possibility of a continued moved higher.

Volatility Index (VIX)

The VIX moved lower again, reaching new low levels at 1816. This means that the markets remain very comfortable at the current levels and complacency remains high. As we said last week there will at some point in 2010 almost certainly be a correction of decent size in the stock markets and a probable large move higher in the VIX as fear returns to the markets and traders look to protect themselves.

Commodities

The big gainer for the week was Orange juice was gained 17.1% for the week and included 2 limit up days of the imposed-exchange limit, which is 10 cents per pound. 10 cents per pound equates to 1000 financial spread betting points. Some of the coldest weather in years is affecting the crops in Florida.

Copper continued to move higher, once again posting new contract highs and ending the week ahead in spite of a fairly large sell off on Thursday and Friday. The long term trend is still up for the metals sector and strength returned to both Gold and Silver during the past week with Silver adding 9.65% for the week and Gold adding 3.9%

Crude oil broke through resistance at $80 but remains just below the October highs. No leaded gas and Heating oil both advanced for the week and reached new contract highs in the process.

The long term trend is still up for energies with the exception of Natural gas. Natural gas remains the weakest of the energies but did briefly manage to clear resistance at 6000 in a volatile week before pulling back. Gas ended the week ahead by 3.18%.

Currencies

The dollar index declined for the week as the rally from the end of last year continues to fizzle out and the market remains unable to break  through resistance at 7900. Therefore we have still yet to see sufficient strength in the US dollar to confirm a change of trend and for now the trend remains down.

The so called commodity based currencies of Australia, Canada and New Zealand all advanced for the week on the back of higher commodity prices and may continue to advance. All 3 of these markets remain below the highs set in 2009 but have already recovered some of their losses from the US dollar rally at the end of last year.

The British pound ended the week slightly lower but closed once again above $1.60 having earlier been lower. The trend remains down for the pound.

The Euro held firm above support at $1.42 and a range is forming between $1.45 and $1.42. A break of either level is likely to give rise to a reasonable sized move. For now the long term trend remains up.

Interest rate futures

Longer term interest rate futures ended the week marginally higher but the shorter term advanced higher from support. The long term trend is still up for the shorter term markets and will remain so as long as support holds.

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Kind Regards

Robert Stewart