Weekly overview 30.04.2017

Mentioned products: SPX, RUT, NDX, SX5E, AUDUSD, NZDUSD, CL, RBS

It’s so hard to write something really exciting in the equity indices space right now. Sure, I think we can expect another move higher some time, but are we first on a course to fill those nasty gaps with some choppy action? There are few proofs which could back this thesis.

I wrote about Russell 2000 a lot lately. Isn’t it ironic, that the bears are so vocal at poiting to extreme net long spec positioning when it builds, but so quiet when there is extreme net short spec positioning? Speculators are right now holding a big short position in RUT. This doesn’t mean anything for the price action itself, but should the price start to rally, they’ll have to cover and will thus support the rally even more. Anyway, RUT broke above 1385/1394 as discussed last week, but Friday’s action wasn’t very constructive for a rally! So, will we fill the gap now? 

SPX is also just sitting below a major resistance, which means we might go lower first before a break above 2400. On the other hand Nasdaq hit a cup&handle 200% extension target. 

And then we have Euro Stoxx 50 which are in the middle of the breaking process of it’s multi year resistance trendline. If we get some weakness in the US indices, SX5E might feel it as well, but on a relative basis European stocks could start outperforming the US stocks, especially if we clear some political risks.. 

I won’t write much about the dollar this week as I wrote a special post about it already. Things haven’t changed much since then, so please read it here: Real test for US dollar bulls! I will rather point you to some other currency pairs. NZD is very weak against other currencies and there are few good setups to trade. AUDNZD is breaking out of it’s triangle formation. Note the small build up recently, which makes it even more constructive. 

Also NZDUSD was very bearish last week. Week ended trading at .6865 and while this is the lowest weekly close since mid ’16, we still didn’t close below the Dec ’16’s lows. One to watch closely for a break below.

And.. crude. It sold off nicely as expected. I mentioned last week that it might be too late to sell right now. In fact, I am looking for long swing opportunities as we are trading just above the major trendline (see below) and seasonality also is supportive for oil but don’t try to catch a falling knife! We also should expect more and more (bullish) OPEC headlines as their meet on the 25th of May becomes closer and closer with each day. Let’s see what new week brings. 

Let me finish this week with a clean break in Royal Bank of Scotland. We saw a nice completion of an inverted H&S bottoming pattern with a break above £2.60 and now targetting £3.70 if support holds.

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