LS Trader Weekly Update

The recent short term moves in the stock and currency markets continued this past week with stocks falling once again and the US dollar gaining steam and rising for the week against all the major markets that we trade at LS Trader. Commodity markets continue to head lower with several new downtrends on the horizon.

The LS Trader System Weekly Update

Stocks

From last week “A correction in stocks has been on the cards due to both the size and duration of the recent rally but it remains to be seen what will happen from here. The long term trend is still up but this will not be the case for too long if heavy selling of the magnitude seen over the past week continues.”

Weakness in stocks continued but the moves lower were less than the previous week as stock market volatility declined somewhat from the previous week. Overall the long term trend remains up for stocks but weakness is evident in several indexes. The Nasdaq 100 was the worst hit after declining 3.25% for the week and falling to its lowest level since early November last year.

Volatility Index (VIX)

The VIX declined for the week, giving back a fair portion of the gains from the previous week. Support was found at around 22 and we may see a move higher again over the next couple of weeks.

Commodities

Commodity markets were generally lower with some good sized declines in several markets with Sugar and Rough rice being the only markets to move higher. Sugar added 3.89% for the week and broke out to new contract and multi year highs once again. There was a brief attempt at crossing the 30 cent mark which failed early in the week but a strong close on Friday at 29.90 suggests we may see another attempt at that level this week. If 30 cents is again rejected then a move back to support at around 28 cents may follow.

The metals markets were heavily hit with large declines in most of the metals. Copper took out support early in the week and brought a decent trend that had been in place for a few months to an end. Silver declined 4.38% for the week and is currently covering just above support at 16. April Gold was marginally lower but traded in a fairly tight range all week with traders undecided on the next move. Support at $1050 looks to be the downside target and $1148 the upside target.

Energy markets were all lower but the long term trend remains up for now. March Crude Oil tested support at $72.45 before closing at $72.89. The $72.45 support level will be the one to watch this week as a break here will likely lead to a move lower to $70 whereas support may push the market back up to the middle of the trading range that has been in place for the past few months.

Currencies

The US Dollar Index continued to move higher, advancing to its highest level since August last year. The Euro continued to decline and took out support at $1.40 that we mentioned last week. As before we now target $1.35 and possibly later in the year all the way back to $1.29.

All of the major currencies fell for the week against the dollar and the British pound declined against the Japanese Yen as well as the dollar. The commodity-based currencies of Canada, Australia and New Zealand were all lower but all have yet to show sufficient weakness for a change of long term trend.

Interest rate futures

Interest rate futures were higher with the 5 & 10 Year Notes leading the way. The 30-year bond continues to lag and registered a small loss for the week. The long term trend remains up for the shorter term interest rate markets and down for the 30 year bond.

Kind Regards

Robert Stewart