LS Trader Weekly Update

The past week has seen the markets recover from the Goldman Sachs induced sell-off and once again seen the major indexes post new highs for the year. So far, the markets have shrugged off all the bad news that has come out of late and continue to move higher. The long term trends are as before, which is up for stocks, commodities and the US dollar.

The LS Trader System Weekly Update

Stocks

All 3 major US stock indexes are now back up above the psychological round numbers that we have been writing about for the past couple of weeks and we may yet see a continuation higher. Whilst a run like we have seen suggests that the markets are overextended the fact remains that they continue to move higher, even is response to bad news. This is normally the sign of a strong market so the odds favour higher prices still for stocks.

The Nasdaq 100 finally reached and cleared our target at 2040 before moving higher to close the week out at 2053. The next target will be resistance at 2070 and if that can be cleared then we may even see 2100.

The S&P 500 closed at its highest level on Friday since September 2008 and may now target 1232. The German Dax is lagging the US markets as it is still below the highs set earlier in the year. We may see a test of those highs this week. Currently, all the major indexes are above support.

Volatility Index (VIX)

The VIX opened higher on Monday but then spent the rest of the week moving lower and closed the week out down 9.48% at 16.62 as the markets seem to have shrugged off the Goldman Sachs news.

Commodities

Gold is beginning to move higher again and added 1.48% during the past week. We may now see a continuation higher to test resistance at $1170.70. If this level is reached and taken out then there is little in the way of resistance all the way up to the highs set late last year.

Palladium and Platinum also moved higher with Copper lagging behind. Copper may well test short term support this week and currently looks to be the weakest of the metals.

Energies moved higher again with Crude Oil pushing higher from support around the $82 level. No leaded gasoline was also higher, as was heating oil.

Sugar continued the downtrend having lost 1.82% this week before closing at 15.66. We may see a test of support at 15.46 this week. If this support fails then there is a possible continuation lower to 13.55.

Currencies

It was a mixed week for currencies, with the US dollar gaining against the Euro, Sterling, Japanese Yen and Swiss France but losing ground against the Canadian dollar and Australian dollar. The dollar index was higher for the week, and considerably higher before some selling on Friday. It was looking at one stage that we were going to get a test of the highs of the year at 8252 but the market fell short of that after topping out at 8220. We may yet see a test of those highs this coming week.

Interest rate futures

Interest rate futures drifted lower for the week and are now back in the sideways trading range. Short term futures remain closer to an upside breakout but longer term futures remain closer to a downside breakout. There is still divergence between the long term trends, with the long term trend up for the 5 & 10 year T notes but still down for the 30 year bond. We will remain on the sidelines until some clear direction is seen.

Kind Regards

Robert Stewart