LS Trader Weekly Update

The dollar's recent short-term strength initially continued this past week but then ran out of steam. The long-term momentum is still very much against the dollar and even in spite of the recent dollar rally the value of the net short position against the dollar is still $20.01 billion according to Reuters and the CFTC. The dollar is obviously a big driver behind commodities and stocks and uncertainty in the dollar is currently impacting other markets.

Stocks

Stock indexes were lower for the week across the board, with several indexes either breaking or heading towards support levels. The S&P 500 did continue lower, falling through 1325 support but just holding on to the 1316 level. That level may well be tested next week and if support fails then we may see further declines to 1290.

As we wrote last week the long term trend remains up for the indexes with the exception of the Nikkei, which remains the weakest of the indexes and still the most likely to break down first, but there is good support for the Nikkei between 9335 and 9400.

Commodities

Gold edged lower at the start of the week but then bounced exactly off the long-term trendline that we wrote about last week that has been in place since the February lows at $1310. Gold ended the week ahead by 1.02% having retaken the $1500 level. There are now 2 trendlines in play that may provide support around the $1480 level. The long-term trend remains up but a break above $1526.80 will be needed if the uptrend is going to resume.

Crude ended the week slight lower having tried twice to regain the $100 level. We wrote last week about support around 9500 and the fact that buyers are coming in around that level as evidenced by the long lower shadows on the daily charts. We saw a couple more long lower shadows on the daily charts this week as 9500 continues to provide support. As before, these lower shadows continue to bounce off the long-term trendline, which currently sits just above 9500.

Currencies

The dollar index initially continued higher, moving above 7600 for a second time but once again being unable to stay above that level. If the index can regain and close above 7600 the next target will be resistance from the shooting star pattern formed on 1st April.

After initial dollar strength over during the past week, the dollar ended down against most of the majors, with the main exception being the Japanese yen. This was more due to yen weakness than dollar strength.

Holding up better than most of the major currencies are the Swiss Franc and the New Zealand dollar. The Franc has continued its recent long-term uptrend against the dollar and is still close to all time highs. The New Zealand dollar recovered well from early weakness to make new 2 week highs and may yet have another go at the highs of the year at 8100.

Interest rate futures

Interest rate futures continue to edge higher in line with the long-term trend. The 5 & 10 year notes and the 30 year bonds all hit new highs for the year during the past week. The long-term trend remains up across the sector.

Kind Regards

Robert Stewart