LS Trader Weekly Update

This past week has seen new highs for the year for stocks but has also seen more short term weakness for the US dollar. The recent dollar rally may be coming to an end against some of the majors but the rally for stocks continues. This week the LS Trader system is entering 3 new trades, which takes our total number of open positions to 19, which is the most we have had open at any one time since last year.

As before, the long term trend remains up for the dollar, commodities and stocks.

The LS Trader System Weekly Update

Stocks

From last week “The momentum is with the bulls and the odds are increasing for a bullish breakout to the upside.” Stocks continue to move higher and the S&P 500 broke out to new highs having cleared resistance. Perhaps importantly, Friday’s close was just above recent resistance and we may see a continuation higher from here.

Also from last week “We will likely see a test of new highs for the year this week (Nasdaq 100).” The Nasdaq 100 did continue higher after gaining 2.2% for the week and is now at its highest level since August 2008.

From last 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.” The Nikkei 225 cleared resistance at 10600 before closing at 10800 (June contract). We may now be headed for a test of the highs for the year at 10960.

This Friday is March triple witching as the March contract for stocks rolls in to June.

Volatility Index (VIX)

The VIX managed a small gain for the week, up just 0.92% for the week. There is support entering the markets around the 1740 level but if this fails then we will likely be headed lower to the lows of the year at 16.86.

Commodities

Crude Oil continued to stay above the key $80 level but was marginally lower for the week (-0.46%). No leaded gas had a go at new highs but was unable to stay above resistance levels before ending the week down by 0.70%. Heating oil also looks indecisive after a very small decline of 0.16% and this market also remains below the highs set in January. Long term the trend is up for the energy sector.

Gold continued the prior week’s weakness having failed at $1150 and fell all the way back to test $1100. If $1100 fails here then we may see further declines to $1050. The trend remains up for the metals.

Currencies

The dollar index continues short term weakness and we may be coming to the end of the recent dollar rally. From last week “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 continues to look like an immovable object and may well be the lows for now as each decline to this level has been met with strong buying.

The British pound gained for the week and regained the $1.50 level. As with the Euro, buyers are entering the market at the lows and keep pushing the pound higher. The trend however is still down

Interest rate futures

Interest rate futures were lower again with only the 30 year bond managing a small gain for the week. The long term trend remains up on the whole for the interest rate markets but the uptrend is far from convincing. For now the markets are holding above short term support and the trend remains up as long as these levels hold.

Kind Regards

Robert Stewart