LS Trader Weekly Update

The past week was a shortened week due to the Good Friday holiday but it was nonetheless an eventful week. The week began with Standard & Poor rating agency saying that they were considering downgrading the triple A credit rating of the US and this sent the markets into turmoil. This was the first time in the 70 years that it has been rating US debt that it cut its outlook from "stable" to "negative". The markets however soon shrugged this off and within a day or so later had regained much of the losses and in many cases gone on to exceed prior levels.

The long term trends have remained unaffected and these are still up for stocks, down for the dollar (how long have we been saying that!) and up for commodities. The dollar has in fact been in a long term downtrend by our measures for the majority of the past 8 years.

Stocks

The S&P 500 remains at a critical point, testing exactly the highs of the year this week before falling back and forming a shooting star pattern on the daily charts. This is a reversal pattern which confirms resistance at the highs of the year, so we may see a pullback before the market continues higher. A close above 1337.5 would lead to a bullish scenario.

There is also a possible inverse head and shoulders pattern forming on the S&P 500 and a break of the neckline would also point to a continuation higher towards 1430. However, confirmation is required and we don't have the yet.

We wrote last week that the Nasdaq 100 needed to take out the highs at 2357.5 to avoid slipping back and the market did move beyond that level this week. We may now see a test of the highs for the year and a resumption of the long term uptrend. To an extent much will depend this week on how the S&P 500 reacts and whether it can clear and close above the highs of the year.

Commodities

We have been writing for several weeks about our target for Gold at $1500 and it finally hit that this week and even closed above it ahead of the Holiday weekend at $1503.8. Silver also continues to blast higher, setting new 31-year highs and now looks set for $50 as the metals sector continues to be bullish, with some of the other metals also starting to push higher.

No leaded gasoline continues to lead the way in the energy sector, once again making new highs since July 08. Crude also advanced for the week but heating oil was slightly lower and is now the weakest of the 3.

Currencies

The dollar index tested the 2009 lows at 7417 that we wrote about last week and initially went lower to 7393.5, a new 16 month low, before recovering slightly and closing the week out at 7418. The trend remains very much against the dollar and may yet continue lower.

After heavy selling on Monday, the Euro regained the losses quickly and went on to make new highs, taking out our target at $1.4550. The Euro then closed at $1.4555, just above prior resistance, which may now act as support due to change of polarity.

The Aussie dollar continues its sharp ascent and was higher for the week by another 1.78%, making new 30-year highs once again. The New Zealand dollar has continued its amazing run, with 21 up days from the past 25.

Interest rate futures

Interest rate futures were lower across the board having initially been higher during Monday's trading. The markets are now in the middle of the current short term trading ranges but the long term trend remains down.

Kind Regards

Robert Stewart