Weekly Outlook - (05/12/2019 - 05/17/2019)

From the lows of 2018-12-24, the anticipated peak from medium term weekly cycles timely happened around first week of May and now our bias at least until <SP_W> is negative as long as S&P doesn’t close above daily trend <SP_DT1> and VIX doesn’t close below daily trend <VIX_DT1> in a decisive manner. Negative outlook is supported by substantial decrease in net short VIX futures held by large traders as of 2019-05-07 in CFTC’s COT report with declining open interest for some time. Though, the positioning from both commercials and non-commercials is still at the extreme end, for our outlook to materialize, we should continue to see improvement in the recent change in positioning trend.

From now till <SP_W>, cycles show the period consists of three parts: 1) DOWN; 2) UP; 3) DOWN. The anticipated decline in the first DOWN part has timely started and expected till <SP_W1>. The second UP part is peaking in the month of <SP_M1>.

On a short term basis, it remains to be seen whether the lows on last Friday at 2825 with divergence in hourly and 4-hourly charts has put in a short-term bottom. We may continue to uptrend as long as we hold above <SP_HT1> in S&P futures. Short-term cycles peak around <SP_HH1> and bottom around <SP_HH2> and then uptrend till <SP_HH3>.

VIX last closed higher for the week at 16.04 and is up trending on all time frames daily, weekly, monthly with trend support at <VIX_DT1>, <VIX_WT1>, <VIX_MT1> respectively. VIX cycles are up trending until <VIX_D> and for them to show their action VIX needs to hold above daily trend level <VIX_DT1>.

VIX Futures COT Chart - 05/07/2019

Up until last Friday, US Dollar was on sell signal since 04/25/2019 after testing the resistance level around 98.128. Similarly, EURUSD was on buy signal since 04/25/2019 after testing the support level around 1.1114 and reversed higher. Commitment of traders (COT) report as of 05/07/2019 showed marginal decrease in net long DXY and marginal increase in net short EURO futures contracts held by large non-commercial traders along with decrease in net open interest in both of these contracts. The trend in COT report shows less favorability for US Dollar as time passes by.

So far the gain in EURUSD has been a lack-luster. And EURUSD is about to give a daily sell signal unless price remains above hourly, daily trend level <EURO_HT1>, <EURO_DT1> respectively and continue to uptrend with good momentum. Weekly trend resistance is at <EURO_WT1>. Similarly, DXY Futures are about to give a daily buy signal to be materialized only if it can move above hourly, daily trend level <DXY_HT1>, <DXY_DT1> respectively and continue to uptrend. Support is at <DXY_S1> and weekly trend level <DXY_WT1>.

US Dollar Index Futures COT - 05/07/2019