LS Trader Weekly Update

There are some promising signs that the markets are beginning to return to a more normal state and are beginning to trend again. Several markets have broken out of their trading ranges in the past week and a few more may be on the verge of doing so. This week the LS Trader system is entering 6 new trades, which takes our total number of open positions to 18, which is the most we have had open for quite some time. This is further indication that more markets are beginning to trend..

The long term trend remains up for the dollar, commodities and stocks

The LS Trader System Weekly Update

Stocks 

Stocks continue to advance from the ended the key lows formed on from Friday 5^th with several indexes heading up towards the highs for the year. The momentum is with the bulls and the odds are increasing for a bullish breakout to the upside. As we have written before, the main index is the S&P 500 and this remains below the highs formed earlier in the year at 1147 (March contract) and this level may provide resistance as there were numerous failed attempts at that level in January.Stocks continue to advance from the ended the key lows formed on from Friday 5^th with several indexes heading up towards the highs for the year. The momentum is with the bulls and the odds are increasing for a bullish breakout to the upside. As we have written before, the main index is the S&P 500 and this remains below the highs formed earlier in the year at 1147 (March contract) and this level may provide resistance as there were numerous failed attempts at that level in January.

Last week we wrote that the Nasdaq 100 had found support at 1780 and may test 1832.5 in the coming week. The test was successful and the Nasdaq 100 advanced to 1885 after advancing 3.68% for the week. We will likely see a test of new highs for the year this week.

The Nikkei has moved up towards the top of the wide box range that we wrote about last week and may test 10600 this week. A breakout from this range to the upside may push the Nikkei up to new highs for the year.

This week sees many traders rolling in to the June contract and out of March ahead of the quarterly expiry the following week.

Volatility Index (VIX)

The VIX declined 11.44% for the week to 1742 and looks to be headed lower to the lows of the year at 16.86. Complacency has returned to the markets and any fear that was present end of January/first week of February has abated.

Commodities

Crude Oil finally cleared the key $80 level and was able to stay above it. Strength was also seen in No leaded gas and Heating oil and both look set to follow Crude higher. Long term the trend is up for the energy sector.

Gold added 1.46% for the week but pulled back from the $1150 area to close at $1135. We may be on the verge of a new leg to the long term uptrend especially if $1150 can be cleared. All the metals were higher with the biggest gainer for the week being Palladium, which resumed the uptrend having posted new contract highs and gaining 9.9% for the week. Copper may test the January highs over the coming weeks. The trend remains up for the metals.

Currencies

The dollar index was marginally lower for the week having declined 0.16%. The long term trend remains up as it does for the dollar against most of the majors but we continue to be at a point where the market appears less certain about the dollar continuing higher.

The Euro once again found support at contract lows at around the $1.3450 level, which is looking like a immovable object at present. Each decline to that level has been met with buying so the downtrend may be drawing to a close soon. That said, if the bears get their way and $1.3450 is cleared to the downside there is room for a decent continuation lower.

The British pound posted new multi month lows during the past week at $1.4778 before a strong recovery led to a close back above $1.50 and a decline of only 0.58%. As with the Euro, strong buying was seen at the lows and these lows from last week may provide new support. The trend remains down for now and upside resistance should be found around $1.58 if cable is able to continue higher.

Interest rate futures

Interest rate futures were lower across the board but for now the trend remains up for the shorter term markets. The long term trend remains down for the 30 year T Bonds and this remains the most likely of the interest rate markets to break to the downside.

 
Kind Regards

Robert Stewart