LS Trader Weekly Update

As with last week, the short term trends continued in the stock and currency markets with stocks moving lower and the US dollar continuing higher. The long term trend is now up for the US dollar against many of the major markets. Commodity markets also continued their recent trend lower.

The LS Trader System Weekly Update

Stocks

Stocks were lower for the week after a strong start. The S&P 500 rallied early but was unable to pierce the 1100 level and moved lower from there before falling at 1059, which is the lowest level for the S&P 500 since early November. The Dow 30 was also lower and support at 10000 failed to hold up the market and support was not seen until 9800. There was a rejection of the lows in the US markets on Friday as buyers came in so it will be interesting to see what happens next week for US stocks. For now the long term trend is still up and Friday’s lows may provide support next week.

The Asian markets were also lower with the Hang Seng eventually ending lower by 3.29% having begun the week positively. The Nikkei also fell 2.34% and is right on the psychological 10000 level

Volatility Index (VIX)

The VIX moved sharply higher again Thursday and Friday having drifted lower for the first half of the week. The VIX at one point on Friday was at its highest level since early November but pulled back to the middle of the range that has formed over the past few months as stocks recovered some of their losses.

Commodities

Commodity markets were lower again with some good sized declines in several markets. Sugar ended the recent uptrend with a fairly steep sell off having failed to hold above the 30 cent mark that we wrote about last week.

The metals markets were once again heavily hit with large declines for all of the major metals markets. Silver took out support at 16 and continued lower and Gold fell to the $1050 level that we mentioned last week, reaching a low for the week at $1044 before closing at $1052. If gold continues lower the next support level is at $1029 and if that gives way then we may well see a move back to test major psychological support at $1000.

With the exception of Natural Gas, the energy markets continued lower and look to be headed towards a test of long term support. For now the trend remains up. From last week “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”. The market actually fell to $69.50 at which point buyers came in and pushed the market back over $70. $69.50 will be the level to watch this week because if buyers fail to come back in we may get an extended move lower.

Currencies

The US Dollar Index continued to gain steam and rose to its highest level since the middle of July 2009. The trend is now up for the Dollar against many of the majors. The Euro moved lower again but fell just short of the first downside target that we wrote about last week and as before we still target $1.35 and possibly later in the year may see $1.29.

The British pound declined sharply against the Japanese Yen and also the US dollar and the trend continues to be down for Sterling. The commodity-based currencies of Canada, Australia and New Zealand were all lower once again and a change of long term trend may be just around the corner.

Interest rate futures

Interest rate futures were higher across the board and even the weak link of the interest rate markets, the 30 year T Bond manage to move higher and reached its highest level since early December. The long term trend remains up for the shorter term interest rate markets and down for the 30 year bond.

Kind Regards

Robert Stewart