LS Trader Weekly Update

This Monday is Presidents’ Day in the US, so the US markets will be closed, leading to a shortened trading week. The past week has been a mixed week for stocks and commodities and uncertainty in many markets is the order of the day right now. Many markets are in trading ranges that have held for quite some time so the probability increases that the next breakout from these ranges could lead to decent sized moves.

The LS Trader System Weekly Update

Stocks

Stocks edged higher for the week, continuing from the lows formed on the previous Friday, which are providing support. The S&P 500 has run in to strong resistance recently at 1100 and the lows from Friday 5^th at 1041 will likely provide support, so those 2 levels are the ones to watch for a breakout in either direction. 1041 looks to be the key level for now to the downside and the trend remains up for US stocks as long as those lows hold. If support at that level fails then we may see a substantial sell off.

The Nasdaq 100 gained 2.19% for the week the strong close on Friday may provide sufficient momentum to push for a test of 1800 resistance this week

Volatility Index (VIX)

The VIX moved sharply lower for the week, giving up 13.05% as stocks continued their steady recovery. Friday’s close at 22.73 was the lowest weekly close for 3 weeks and the VIX is in the middle of the range that has formed over the past few months.

Commodities

The $69.50 level for Crude Oil that we mentioned last week held firm and the long term trend for Crude, Heating Oil and No leaded gas remains up although all 3 markets remain in the middle of the recent trading range. March Crude ended the week ahead by 4.13% and ends the week back near the $75 level that has acted like a magnet over recent weeks. The current range for Crude is between $69.50 and $78. A decisive break through either level may lead to a substantial move in the direction of the breakout but until then more sideways action is likely.

The metals markets were higher across the board with the biggest gainer being Copper, which added 7.95% for the week and moved back above the 30000 level(May contract). Gold also moved higher from $1050 support before closing at $1090. We may get a test of $1100 this week. The trend remains up for the metals with the exception of Silver.

Currencies

The trend continues to be up for the US Dollar Index as it does for the dollar against most of the majors. The dollar index ended the week marginally lower having earlier posted new contract highs on Friday.

The Euro moved lower again and fell just short of the $1.35 target that we wrote about last week. Friday saw new contract lows for the Euro at $1.3531 and we may yet see $1.29 later in the year if support at $1.35 can finally be taken out.

The Australian, Canadian and New Zealand dollars all moved higher for the week and the British pound also posted a slight gain, having earlier posted new contract lows against the dollar. The pound has remained in a tight range spanning only a couple of hundred pips for the past few sessions and may be gearing up for a move, with the odds slightly favouring a break in the direction of the long term trend, which is down

Interest rate futures

Interest rate futures were lower for the week but remain in the current uptrend with the exception of the 30 year T bond. The 5 & 10 year T notes are currently moving sideways with the 10 year note holding between 117 & 118. The trend will remain up as long as support around 117 holds. The longer term interest rate futures remain the weakest of this sector and will likely be the first to begin a new downtrend.

Kind Regards

Robert Stewart