LS Trader Weekly Update

It’s been another volatile week for most markets with large swings being seen in most sectors, especially the stock markets. This coming week will be a shortened trading week with the markets being closed due to the bank Holiday in the UK and the Memorial Day Holiday in the US.

The LS Trader System Weekly Update

Stocks

Last week we wrote: “The S&P did move higher on Friday from the lows of the day at 1051.50 and we may get another test of those lows this coming week. There is also major support from the 5^th February lows at 1035.9 and if those lows are taken out then we could see a big move lower. For now the trend remains up.”

We did get a successful test of 1051.5 and the move continued to 1036.6, just fractionally above the level we identified last week as major support. We then got a reversal pattern from support in the form of a hammer and the market moved higher, ending the week ahead by 0.36%. There is resistance for the S&P 500 around the 1122 level and failure here (if the market gets that high) may send the market back down for another test of the low of the hammer and support at 1036. If support at that level fails we will likely see a substantial sell off. For now, the long term trend remains up for US stocks.

Volatility Index (VIX)

The VIX ended the week lower after some large moves early in the week. The VIX ended the week down by 20.02% and closed out at 32.07. This was the first week in 5 that the VIX had a down week.

Commodities

Gold ended the week higher by 3.15%, having continued higher from key support the previous week at the $1165-$1170 level. The last 2 days of the week saw Gold struggle at resistance at $1220, but remain in a tight range that spanned only a few dollars. We may see a breakout from this tight range this week. The long term trend remains up but resistance at $1220 will need to be cleared fairly quickly or weakness will likely return and take the market back down towards support.

Sugar began the week higher but was unable to clear the resistance level that we mentioned last week and continued to edge lower to close at 14.19 cents, for a decline of 9.33%. We now have a range between the lows at 13 cents and resistance at 15.75. A break of either level may lead to a decent sized move. Long term the trend is down.

Currencies

The Dollar index ended the week higher by 1.22% but the highs of the week fell just short of resistance from the previous week’s highs at 8762. The long term trend remains up but a pullback is on the cards unless or until 8762 is cleared.

The Euro ended the week lower by 2.09% but is still holding above support at around the $1.2140 level. All attempts to break through that support have so far failed so the possibility of a bounce higher to the $1.2670 level increases as time goes on but long term the trend is down.

From last week “The Canadian dollar still remains above long term support around 9200 and the trend remains up as long as this level holds.” We got a test of support on Tuesday in this market with the lows at 9213 proving to be the low for the week and the market ended the week ahead by 1.09%. The trend remains up for the Canadian dollar.

Interest rate futures

Interest rate futures reached new contract highs early in the week but ended the week lower. All 3 markets (5 & 10 year notes and 30 year T Bonds) are still above support and the long term trend remains up.

The short term 3 month Eurodollars did test and fall through the support level that we mentioned last week at 9900, falling to new contract lows at 98.78 before reversing and ending the week flat. The long term trend remains down for this market.

Kind Regards

Robert Stewart