LS Trader Weekly Update

The past week has seen stocks continue higher, especially the stock markets from outside the US such as the Nikkei and the German Dax. Commodity markets were also higher in some sectors with metals and energies gaining strength. US markets were closed Friday.

The long term trend remains up for the dollar, stocks and commodities but there is some weakness entering the interest rate sector.

The LS Trader System Weekly Update

Stocks

The S&P 500, German Dax and Nasdaq 100 all posted new contract highs during the past week once again. The trend remains up for stocks but the US indexes are running in to resistance levels. The Nasdaq is struggling at the resistance from the August 08 highs and if resistance holds then a pullback may be on the cards. Otherwise a continuation higher to around 2040 may follow.

From last week “Friday’s close below recent resistance may lead to a sell off for the Nikkei next week unless new highs can be posted early in the week.” We did indeed get new highs early in the week with the Nikkei gapping higher at the open. We also got another gap higher later in the week before the market closed at its highest level since October 08.

Volatility Index (VIX)

The VIX lost a small amount of ground this week after declining 1.69% for the week and we are back towards the recent lows having closed at 17.47. The markets are still very complacent but we may see volatility picking up later this month depending on the market’s reaction to earnings.

Commodities

Gold advanced 1.87% for the week and broke up through the top of the wedge pattern that we have mentioned recently, which is a bullish sign. The long term trend remains up for Gold but there will be an influence from the US dollar. There was also strength elsewhere in this sector with other markets making new highs. Copper rose to new highs since July 2008.

The energy sector was higher with new highs for Crude and No Leaded gas. We will likely see a test of January highs at $85.43 this week. Long term the trend remains up for energies in spite of recent dollar strength.

Currencies

The dollar index was marginally lower for the week but there was a decent recovery on Friday. The trend remains up for the dollar.

The Euro was higher for the week, rising from support at $1.34. In the short term there is a range between $1.34 and $1.36 and a break of either level could give rise to movement. Long term the trend is down.

The British Pound moved higher for the week against both the Yen and the dollar. We may see a test of resistance at $1.5375 but the trend remains down.

Interest rate futures

Interest rate futures moved lower across the board with the longert term 30 year bond leading the way. The trend is down for the 30 year bond and we may see a continuation lower from here. The long term trend remains up for the shorter term markets for now.

Kind Regards

Robert Stewart