LS Trader Weekly Update

Stocks continued to drift lower for the week but recovered somewhat on Friday but the trends remain down. Commodity and currency markets remain largely undecided on future direction as the general theme of volatility continues across many markets.

Stocks

Last week we wrote that the S&P 500 may fall further and test the 1050 target and that happened this week with a continuation lower to 1037.8, which were new 7 week lows. The market twice bounced off this level so there is good support here in the short term. That said, the short and long term trends are still down in this market as indeed they are for all stock indexes with the exception of the German Dax.

The Nasdaq 100 ended the week down by 1.98% but recovered from new 7 week lows having been considerably lower earlier in the week. The long term trend remains down. The Dow 30 fell 3 times through the psychological 10000 level but recovered on Friday. The trend is down in this market also and we may see further strength in the short term before a likely move lower to test 10000 again.

Volatility Index (VIX)

The VIX declined and ended the week lower by 4.08% at 24.45. Earlier we had seen the market move up towards the key 30 level as we had indicated may happen but fall short at 28.92. Once again future moves will be very much dependant on what happens in the stock markets and particularly the S&P 500 over the coming days.

Commodities

December Gold continued the uptrend this week, advancing higher by 0.74% for the week, reaching its highest level since the 1^st July. On Tuesday the market had a wave of major selling, taking the market back down to $1211.7, where buyers came back in. This level should provide good support should the market begin to show signs of weakness and there is also support at $1200. For now the trend remains up.

Silver had a very strong week in spite of some selling on Friday and ended the week ahead by 5.73% and we may now see a resumption of the long term uptrend.

October Crude oil began the week sharply lower, falling to $70.76 before recovering and going on to advance 1.83%. Heating oil and no leaded gas also followed this move but the trends remain down. There is good support for Crude around the $70 level and this will continue to be the target for bears.

Currencies

The Dollar Index was marginally lower by 0.23% for the week but continues to struggle around the 8300 level as we also wrote last week. This week saw a move up to 8363, which is dead on a resistance level and the dollar was unable to push up through that level. Long term the trend is down for the dollar index.

The British Pound continued marginally lower, falling by 0.12%. The pound had earlier been down as low as $1.5369 on Tuesday before recovering to close at $1.5512. This is back at the prior support/resistance area at $1.55 and the market is clearly undecided on future direction and could go either way. Long term the trend is still up.

The dollar fell once again to new contract lows against the Swiss franc, falling 0.59% for the week. As we wrote last week there are signs that the dollar may be bottoming out against the Yen but we also saw new contract and 15 year lows in this market before a recovery later in the week. The dollar was still lower by 0.44% for the week again. The trend is still against the dollar in both of these markets.

Interest rate futures

Interest rate futures ended marginally lower having been considerably higher earlier in the week. Yields once again fell to record lows in these markets, pushing prices up to new highs on Wednesday before moving lower to end down on Friday. These markets remain above support but there are signs that the trends may be weakening. We’ve been long this sector since early May, riding the trends higher and banked good profits from the September contract on Friday when we rolled forward in to December

Kind Regards

Robert Stewart