XJO WEEKLY
Price structure: Breakout

The Index continues to close at all time highs, driven by Bank stocks and the leading Industrials. Closing the week in the high end of the trading range indicating confidence in holding positions over the Weekend, the market looks set for continuation higher. Companies reporting quarterly activities dominate some of the more volatile individual price moves. The current risk of a profit taking event remains with February typically a month of decline as overseas holders sell stock prior to ex dividend events. The Index remains within a strong Primary Uptrend with the 8385 level as first key support.

Indicator: Relative Strength 14:  Remains Bullish

Relative strength has turned higher in line with the rejection of lower prices and remains above The key 50 level indicating overall Bullish momentum. Only further movements higher towards the 70 level can set a continuing bullish signal for further higher price movements.
Should the RSI turn lower to move too or below the 50 level, the strong indication is for negative momentum to develop leading to Trend failure and further declines.

Comments last week: The 8385 level has remained the key resistance level to cross for the XJO 200 to remain bullish. A continued breakout above this level would be a significant bullish signal, attracting more buyers into the market and driving prices higher. Market participants will be closely monitoring the price action around the 8385 level to provide a price support level, as sustained trading above this support could pave the way for further gains. The 8385 level has remained the key resistance level to cross since November 2024.

XJO DAILY
Price structure: Key levels.

Strong daily volumes have been observed, underpinning the upward momentum and moving prices to new highs. The increased trading activity reflects growing investor confidence and a robust appetite for equities, particularly in the financial and industrial sectors. This positive sentiment is reinforced by the continuous breakout patterns and the formation of higher lows, which signal sustained buying interest and a solid foundation for further gains. The market’s resilience, even in the face of potential profit-taking events, suggests a bullish outlook as long as key Daily support levels hold, the first being 8514 points.

Indicator: Relative Strength 14:

The Relative strength Indicator (14) has turned higher into the close last Friday and has remained above the important 50 level, the overall RSI trend shows slowing momentum. Should a move occur lower too or below the 50 level, Traders would be looking for further Sell signals should a continued lower price move occur with the RSI closing below the “30” level targeting 20. 

Comments from last week: The daily chart for the XJO 200 indicates that support is building, with prices finding a foothold at the 8385 level and building a potential base formation. Traders should closely observe the daily movements to gauge the strength of this emerging support. The importance of maintaining support above the 8083 level cannot be overstated, as it would reinforce the bullish sentiment and provide a solid foundation for future rallies. With a series of Higher low points in place the Index is working towards a retest of the 8514 highs.

S&P 500 WEEKLY: Resistance developing. 

Significant resistance is developing at the 6100-point level as the Index consolidates above the 5853 support line. This resistance level could serve as a critical threshold for future price advances, with a successful breakout above this level potentially triggering substantial buying interest and driving the Index to new highs. Conversely, a failure to surpass this resistance could lead to increased selling pressure and a potential retest of lower support levels. The “Mid-range” close for the week shows declining confidence in holding over Weekend periods.

Indicator: Relative Strength Indicator 14.  Divergence failure

The Bearish Divergence is again being observed in the Relative Strength Index (RSI) and is signalling declining price momentum, no follow through lower has taken place. This occurs when prices continue to rise while the RSI trends lower, indicating weakening momentum and the potential for lower prices.

The RSI showing a longer-term Bearish Divergence confirming caution remains. If the RSI crosses below the key threshold of 50, it may confirm a bearish outlook.

Comments from last week: The S&P500 continues to consolidate along the 5853-support level, as markets contemplate the first days of the new US Presidency. Overall, the structure is becoming very Bullish for further gains. The underlying Primary Trend remains UP.

Any failure to maintain these support levels could signal a sudden shift in market sentiment, leading to increased selling pressure and potential declines. Traders and investors should remain vigilant, closely monitoring support levels at 5853 and RSI movements to avoid potential losses.

SPX DAILY Price Structure: Dark Cloud

The Island Top discussed last week has followed through to a very weak open to start last week, however the following price rally has filled the Gap. The market’s swift recovery from the initial dip suggests underlying strength and resilience. Traders should note the importance of this gap fill, as it often indicates the completion of a short-term correction and the potential for renewed upward momentum. The 6100-resistance level is now the watch level for Bullish traders, failure to move over this level may see a loss of confidence and the beginning of a new decline.

Indicator: Relative strength 14. Weak Divergence

The Relative Strength Indicator (RSI) continues to move over the key 50 level, suggesting that with the rising prices, momentum remains positive. If the RSI falls below the pivotal 50 level, it would likely confirm a bearish outlook, leading to further downside targets.

Comments from last week:  The Island Top, defined by a higher Gap open followed by consolidation when this is completed should a Gap down in price occur the top will be in place. As the S&P trades back into the all-time higher area the risk remains of a sharp decline. The 6020 level remains as current key support level, however the current breakout is very Bullish for further gains should the Index continue to close over the 6100 point level this trading week. The Index has set new highs following a consolidation decline during December and January.

NASDAQ (100) DAILY Price structure: Gap Fill

The Nasdaq made a significant gap down on the open last Monday, followed by a strong advance to close the gap. However, Friday’s rejection saw the index move back towards the 21,340 level, suggesting that a top may be forming. This movement indicates potential uncertainty in the market, with traders closely watching the 21,340-support level. A failure to hold this level could trigger further selling pressure, reinforcing the bearish signals and potentially leading to a more pronounced decline.

Indicator: Relative Strength 14: Bearish turn

Relative strength has now turned lower while moving back to the 50 level, indicating weakening momentum as price also moves higher. The rising RSI over the 50 value can provide some early insight for the current Major Primary UP trend to develop further. A further move lower towards the 50 level would send a very Bearish signal not to be ignored.

Comments from last week: With the Index Gapping higher and consolidating in the past week the potential for an Island top remains in place. Should the price Gap drop from this level the top will be confirmed. The current breakout from the declining pattern (3 lows) remains bullish only with continuing closes over the 21,600 level. 

As we move forward, this week the current UP trend is expected to remain in place. The potential for reversal remains with the 21,340-level remaining as key support.

USD Spot GOLD – DAILY: Resistance breakout

USD Gold has moved to an all-time high price above the key $2800 level with a strong finish last Friday. This significant increase has further validated the bullish outlook on the precious metal, driven by strong market momentum and investor demand. 

However, traders should remain vigilant for any price declines towards the $2790.0 breakout level, often price will move back to retest a key breakout point, a close below this key level could signal a change in the current upward momentum.

Indicator: Relative Strength 14: Swing Higher.

The RSI has turned higher to finish at the 70 level. This is a bullish signal, and it remains a strong observation price is resuming upward momentum. Further advances in the coming weeks over the 70 level will remain a very Bullish signal.  Price declines from this level will see the RSI move lower towards the 50 level.

Comments from last week: USD Gold has moved to retest the $2790 levels set in October last year. The USD Gold has been on a bullish trajectory, recently testing the resistance levels around $2790 set in October of the previous year. The sustained upward movement from the pennant pattern indicates strong bullish momentum, suggesting further gains are on the horizon. The market momentum remains positive, as evidenced by the RSI’s behaviour, which continues to move higher above the pivotal 50 level. This is a bullish signal, reinforcing the potential for further upward advances in the coming weeks. However, traders should remain vigilant for any price declines towards the $2717.0 level, as this could signal a shift in momentum.

AUD GOLD – DAILY: Primary UP Trend.

Australian Dollar Gold has now surpassed the key $4500 level but closed at $4,493.0, with an extended range for the week. The combination of a declining Australian Dollar and the advancement in the USD Gold price has moved price higher.  Unhedged Australian based Gold producers remain very positive with further price appreciation expected.

Indicator:  Relative Strength 14:  

The Relative Strength Index (RSI) is showing a consistent move above the pivotal 50 level. This persistence above the 50 midline suggests that the bullish momentum is not only intact but likely to strengthen. Traders are advised to watch for any minor pullbacks as potential buying opportunities within this broader uptrend, as the overall market sentiment remains strongly in favour of continued gains.

The $AUD Gold price continues to move higher as a combination of the increasing USD Gold price but being partially offset by the appreciation in the underlying $AUD. This remains very Bullish for unhedged Australian Gold producers. As the AUD Gold price advances, the next significant resistance level to watch is around the A$4,500 mark.

SILVER Price structure: Key levels in play

This $31.50 level remains the key level to hold in this coming week. Silver continues to move within a large price consolidation area. The current breakout and close over the $31.50 level is a very positive signal for further gains. This breakout suggests that silver is poised for a significant upward movement, especially if it manages to sustain the momentum above this critical resistance level. Investors should closely watch the market for continued strength as it could indicate the beginning of a new bullish phase for silver.

Relative Strength 14:

Relative strength is now moving in line with the underlying reversal price structure. The current reading has moved above the key 50 level, showing increasing Bullish momentum.  This indicator should be monitored for a BUY divergence signal, completed with a continuing closing price above $29.60 level.

Comments from last week: Silver is not within a major Weekly Bull market trend and continues to consolidate above the $29.60 level. Based on this week’s closing price the appreciation value in Silver has been the same as Gold since 2022 at 70%. The Gold price must move substantially higher to bring Silver higher, a close over the $31.50 would be significant. The current view is Silver remains within a large price consolidation area below the $32.0 level and above the $28.80 level.

AUSTRALIAN VOLATILITY INDEX:  The equities trader’s compass.

The current volatility closing value has closed below the key 11 level following a small spike higher during the week.  Current closing value indicates the XVI volatility level is within the Complacement level for Equities as the market volatility begins to see lower priced PUT option insurance to cover portfolio risk. 

With the indicator value moving higher Mid-week, the forward pricing (Volatility) of PUT options (insurance) was increasing, however this is observed against an overall Bullish advance in the market.

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

The cost of 3month forward PUT options is moving lower from recent higher levels over 13.

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.