• U.S stocks looked poised for future upside. Do not short strength in U.S stocks. Europeans markets backing off a bit last week after tremendous strength. Not a sign of any significant reversal at this time.
  • Rates and FX is where action is at the moment really. Great setups brewing all over FX. Strength in U.S bonds should have stopped out shorts, short-term bearish setups have been invalidated. U.S bonds spiked up 2 sigma on the week which is significant.
  • Only new news in commodities is the sell off in crude to finish the week. More on that below.


Market: S&P500

Reason for observation: Daily bull flag setup

Short-term bias: Bullish

Long-term bias: Bullish

Just a daily bull flag setup within a larger weekly bull flag setup. With this volatility contraction on the daily time-frame, the break out of this daily flag could be explosive, up or down. However, all time-frames look set for upside, so the break out of this flag has a higher probability of resolving up than down.


Market: Russell 2000

Reason for observation: Daily bull flag setup

Short-term bias: Bullish

Long-term bias: Bullish

After making new all time highs, small cap stocks are now pulling back slightly. This first pullback after the breakout is a textbook high probability trade, with a larger r/r ratio than a standard pullback. May need another week before the pattern hits the “sweet spot” but any upside momentum can get this market moving higher once again.


Market: U.S Dollar

Reason for observation: Daily bull flag trigger

Short-term bias: Bullish

Long-term bias: Neutral

Too much strength to hold a bearish long-term bias on the U.S dollar, moving to neutral for now. Pushing into the upper Bollinger band on the weekly for the first time since 2017, certainly a change of character.


Market: AUDUSD

Reason for observation: Daily bear flag setup

Short-term bias: Bearish

Long-term bias: Bearish

A lot of downside potential in this complex pullback bear flag in the AUDUSD.


Market: Copper

Reason for observation: Volatility contraction

Short-term bias: Neutral

Long-term bias: Bullish

No real conviction on any side of this trade in the short-term but maybe this volatility contraction in Copper will lead to volatility expansion. Would be nice to see some movement in an otherwise boring market in 2018 after a great trading environment in 2017.


Market: Crude oil

Reason for observation: Change of character

Short-term bias: Neutral

Long-term bias: Bullish

Rough end to the week for crude oil. Longs should have been stopped out on either Thursday or Friday and now on the sidelines. This certainly is not the end of the road for long trades in crude oil, very likely far from that possibility. The weekly and monthly charts are still very bullish so this market will just need some time to reset and form new setups for the future.