XJO WEEKLY
Price structure: Closing all time high.

The Weekly chart shows another small range low to high advance, the current close at a Weekly all-time high is an important observation as no broad profit taking has taken place indicating sentiment remains strong. Current observable price rejection (FO) still remains from above the 8083 level. This week key support above the 7910 level is critical with the current close over the important 8083 level, further short term advances could be expected. The final stages of the Australian FY reporting have been completed last week.

Indicator: Relative Strength 14 – Neutral to Bullish

Relative strength has turned higher in line with the long-range price action for the week and remains above the key 50 level from the bullish momentum within the previous 14 bars. Only further movements higher towards the 70 level can set a continuing bullish signal for further higher price movements. Should the RSI reading move below the 50 level, the strong indication is for negative momentum to develop leading to Trend failure and further consolidation.

Comments last week: The Weekly chart shows a small range low to high advance, the current close at an all-time high is an important observation as no broad profit taking has taken place. Current observable price rejection remains above the 8083 level. This week key support remains above the 7910 level with resistance at 8083 points. The final stages of the Australian FY reporting will be completed this week.

XJO DAILY
Price structure: Developing Reverse point wave.

The dramatic decline of early August has been recovered, the current risk is a new Daily high being set, a reversal from a new high will confirm the “Reverse point Wave” pattern of higher highs and the lower low within the development of price movement. The Reverse point Wave is a topping pattern often with a sharp decline developing from the new high. Currently the Index must set a new high towards 8300 with a swing reversal completing the pattern.

Indicator: Relative Strength 14: Bullish

The Relative Strength Indicator (14) turned higher into the close last Friday while remaining over the key 50 level. The outlook is bullish. Traders would be looking for further BUY momentum should a continued price move occur, with the RSI continuing to rise while over the “50” level, targeting 70.

Comments from last week: The slow grind higher during last week on close examination shows a small retest back towards the 7910 level, with recovery to close on the high of the range last Wednesday. The small body of the daily range shows Daily price consolidation. As with the Weekly observation, 7910 remains key support should a decline gather momentum. In the short term 8000 points is the strong psychological level to hold to keep the buyers interested.

S&P 500 WEEKLY: Potential Double top.

The sharp recovery from the “Gap open Buy” signal set during the early August decline has followed through to see the Index retest towards the 5670 level. Currently, the Index has the potential to set a double-top pattern should a reversal signal be given. Continued Weekly closing prices above the key 5670 level would negate the potential for a double top reversal, confirming the overall Primary UP trend remains intact.

Indicator: Relative Strength Indicator 14. Divergence

Relative Strength has turned lower as strong price momentum has given way. The RSI (momentum)  value has remained over the key 50 level during this Primary UP trend. A turn lower towards the 50 with any Index price movement towards the 5400-point level will re-assert a full bearish RSI signal. The current position of the Relative strength indicator has a second Bearish divergence signal developing.

Comments from last week: The strong range bars from the “Gap open buy” followed by the “Pivot point” has continued to set a bullish tone to close at an all-time weekly high. Last week the range was small but importantly no overlap into the previous week’s range.  The Spike high resistance level is 5670 points, this will be the level to cross and remain over into the close of this week to remain bullish in the long term. The underlying Primary Trend remains UP.

SPX DAILY Price Structure: Bullish flag.

As the Index Daily movements consolidate below the 5670, the overlapping Daily bars have developed into a Bullish Flag pattern, this pattern targets 6000 points. Bullish Flag patterns can fail, an indication of this would be for the Index to close lower into the 5500 Gap area. Considering the sharp fluid price movement to recover the highs set during July further consolidation to prove buyer support would be a strong outcome.

Indicator: Relative Strength Indicator 14

Relative Strength Indicator has remained above the 50 level into last Friday, traders should consider a further higher close above the 50 level as a strong Bullish momentum signal. With a continued move higher above the “50” level the expectation of further advances remains. Relative strength is a momentum indicator, only a swing back higher towards the key 70 level would set a very strong Bullish signal that should not be ignored.

Comments from last week: The final “Gap” at 5639 points has been filled with immediate rejection setting an Outside period OPd last Thursday. Last Friday’s Inside period IP shows the market coming back into balance below the Daily/Weekly high resistance level of 5670. Without follow through lower from the OP set last Thursday the Index may remain bullish. Following the fluid movement from the 5100-point low, when found at a high, the OP has a high statistical outcome for marking the real high swing within the next 3 bars.

NASDAQ (100) DAILY Price structure:  Bullish flag

As with the S&P500 the Nasdaq has developed a Bullish Flag pattern as price overlaps the previous sessions setting a slow decline. The Tech heavy Index has consolidated around the recent reporting including NVidia not surprising the market with strong numbers. Without a catalyst for further gains the Nasdaq is at risk of confirming a lower high.

Indicator: Relative Strength 14

The Relative Strength has now remained above the key 50 level; however, momentum is declining. Relative strength remaining rising above the important 50 level is required before a Bullish momentum signal can be declared. This can provide some early insight for Major Primary UP trend continuation, conversely as consolidation takes place the RSI value will move lower below the “50” and would confirm a loss of upward momentum.

Comments from last week:  The Nasdaq has not closed out the Gap at 20,000-point level before setting the OP + IP. This week should the price move lower into the 19,100 point “Gap” a bullish reversal should immediately follow for the Index to remain Bullish going into September. The concern is a full reversal at this level will set an observable lower high with the potential to follow lower into the 17,500-level reversing the current Primary UP Trend.

USD Spot GOLD – DAILY: Consolidation at $2,500

USD Gold remains within a consolidation pattern above the now key $2500 level. The $2570 price target remains in place as the underlying Primary trend is UP. Gold closing below the $2483 would indicate a reversal in place with the potential to retest$2431.0 and lower.The current consolidation is regarded as Bullish with continuing Daily closes towards the $2520 level, traders would look for a close above this level to confirm a Bullish move underway.

Indicator: Relative Strength 14: Bullish

The RSI has turned lower but remains above the 50 level. As price consolidation occurs, the RSI naturally moves towards the 50 level until a directional move occurs. Long-term traders should continue to monitor this Daily chart for a fifth major yearly top developing at this level, with further declines in the long term. A further close over the $2570 level would negate this view.

Comments from last week: USD Gold again moves to consolidation, currently at $2,500 level, this remains very bullish for further gains in the near term. The near-term price target of $2570 remains, a further close above this target level is possible on the current price momentum. The current close remains above the $2483 FO high set on July 17th, a very bullish setup. The underlying Primary trend is UP.

SILVER Price structure: Corrective

Again, traders are reminded that Silver is not Gold. Last week, USD Silver closed back onto the $28.80 level, which has been in play as Support and Resistance for over three years. Several weeks ago, I discussed this current advance as a Corrective move within a Downtrend. For Silver to confirm an UP trend a close over the recent (FO) high over the $30.0 level is required.

Relative Strength 14:

Over the past 3 months the Relative strength has steadily declined and has again moved below the 50-level moving towards the 30 level, indicating a sell signal. Last week’s commentary included this, “The RSI should be monitored for a continued move below the 50-level indicating MOMENTUM FAILURE”.  Last Friday’s close saw the indicator turn lower, with a cross below this key level. The current declining momentum sets the Trendline target of $27.0 until a reversal pattern is set.

Comments from last week:  Silver is not Gold USD silver shows the current move underway is corrective within the down trend but remains highly tradable for short term price action participants. Last week saw a back test of the $28.80 resistance level again with immediate support with Friday setting a close at the high end of the Daily range.

AUSTRALIAN VOLATILITY INDEX: The equities trader’s compass.

The current volatility closing value has moved to close back below the key 11 level.  Current closing value indicates the XVI volatility level has moved back complacent level for Equities level. Markets are not pricing in future downside protection. 

With the indicator moving lower, the forward pricing (Volatility) of PUT options (insurance) is decreasing, this is observed against a Bullish market indicating market participants believe equity price movements may turn higher. 

For continued support of equities, the XVI should remain subdued below the “13” level.

The cost of 3month forward PUT options is lower from recent elevated levels.

The XVI is the difference between 3-month forward pricing of ETO Options against current month. As markets anticipate events, the forward priced option volatility changes, hence this longer dated forward price change, or “skew” in pricing is measured in this XVI. The XVI value works as an inverse correlation to the underlying market.