Stock Markets Showing Signs Of Weakness

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The past week was a shortened trading week as Saturday the 4th was Independence Day in the US and the US markets were closed on Thursday.

Stocks

As we wrote last week, we are now in to a seasonally weak time of year for stocks with the next 4 months being the weakest month of the year for the Nasdaq on a seasonal basis. The Nasdaq 100 closed the week sharply lower after a steep sell off on Thursday, the last trading day before the holiday weekend.

The S&P 500 ended the week lower again after a third week of declines. The S&P 500 remains below the 200 day moving average and the S&P 500 looks weak and may test support at 875 in the coming week. If support fails at 875 then we may see a move lower down towards the 800 level. A move such as this would likely pull the other stock markets down with it. The German Dax is also hovering just above support and also just above the 200 day moving average so a failure here may lead to a move lower.

There are certainly signs of weakness in the stock markets and the recent rally looks to be over for now and a correction due to the downside.

Commodities

The grains and soft markets were mixed for the week with Corn and Wheat making new contract lows. Rough rice however was sharply higher after an impressive 3 day rally. Cotton and Sugar were both higher after a strong rally in the Cotton market. Cotton may move higher at test the 6375 level and Sugar posted new contract highs during the past week.

Metals and energies were lower and soft markets were mixed. Silver hit new contract lows reaching its lowest level in 2 months and Gold continues to move sideways between $920 and $950. Crude dipped below the 200 day moving average and reached its lowest level in a month and heating oil, no leaded gas and Natural gas were all lower.

Overall the commodity markets remain mixed as they consolidate before the next move.

Currencies

The US dollar index ended the slightly higher as the higher risk commodity based currencies of Australia, New Zealand and Canada sold off. The dollar also ended the week ahead against the British pound and the Euro.

Interest rate futures

Interest rate futures were higher again after the recent period of strength continued. Shorter term interest rate futures were sharply higher. The 5 year notes closed right on the 200 day moving average so the long term trend is not clearly defined and moves could be seen in either direction.

Good trading

Phil Seaton

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