market review from LS Trader
The S&P 500 reached new 2 year highs at 1224.5 on Tuesday but then moved lower from there, back below the 1200 level and closing the week at 1195.4 and may yet fall further to support at 1167.
The European indexes held up better than the US markets and Friday saw some late buying on the German Dax, with the Dax ending higher having been sharply lower earlier in the day. The Asian markets also showed weakness having also been higher earlier in the week.
The stock indexes remain in a long term uptrend and are all above support.
The stock markets continue to be bullish and the long term trend remains up almost across the board for indexes.
Volatility Index (VIX)
It’s been a fairly strong week for the VIX, which has once again continued higher from the 17.90 support area and ended with a weekly gain of 12.87%. The next upside target is around the 24.50 area and it remains to be seen over the coming weeks as to whether 17.90 was a significant bottom.
Last week we wrote that we were looking for $1400 early in the week as well as the market closing above that level in order to be able to push on. We got a move above $1400 on Monday and a new all time high at $1424.3 on Wednesday and the market managed 2 daily close above $1400. On the weekly chart we did not get the close above $1400 and saw a very steep sell off on Friday of almost $53. In spite of this move the long term trend is still very much up and the market remains above support.
Sugar had a very volatile week having reached a new 30 year high on Thursday but then made the steepest 2 day sell off in 30 years, falling through short term support. Cotton was also lower as were most of the commodities. Overall the long term trend remains up for virtually every commodity market.
The US dollar has had a good week with the Dollar Index pushing up to test resistance at the high of the bearish engulfing pattern formed on the 21st October, which is also at a resistance point that has held for over 5 weeks. Friday saw a doji pattern which points to indecision at this level. Due to the market’s proximity to this level we will likely see a breakout or a reversal on Monday. If this level can be cleared then we will likely see a move higher towards 80.
The British Pound held up better than most of the majors and buying is entering the market on any falls to around the $1.60 level at present. The Pound also continued the recent revival against the Yen, showing some short term strength in reaching new 6 week highs. The long term trend remains down against the Yen but up against the dollar.
Interest rate futures
Interest rate futures sold off during the past week with the longer term 30 year T Bonds being the most heavily sold, taking the market through support. This has been the weaker link in the interest rate futures sector but the trend overall in the sector remains up.
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Robert Stewart & Phil Seaton
The LS Trader Team
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