XJO WEEKLY
Price structure: Breakout New ATH

The Index has closed at an all time high and entered into a Primary UP trend. With the majority of the underlying stocks still below their 200 day moving averages, continued sentiment may lift the Index considerably higher with 8000 point a strong target as Bullish sentiment improves. The #3 hammer bar remains as a strong signal for reversal when found in a high price area, if not resolved into a lower market this week will prove the bullish sentiment is in place.

Indicator: Relative Strength 14

Relative strength remains above the 50 level again as part of the overall directional move higher in price. Only further movements towards the 70 level will remain a bullish signal for further gains, last week the RSI value moved sideways in line with price consolidation, however a new high is required over the late Q4-2023 high point.  A new divergence signal may develop at this level.

Comments last week: The forward view for a further retracement remains the technical observation for this week. The small range set last week against the reversal bar #3 does not indicate selling pressure. With the close above the October 2021 all-time high level of 7632, support remains strong at this level. Consistent with Trend modelling, consolidations usually last over 3 weeks. A close below the 7540 level will indicate a reversal.

XJO DAILY
Price structure: Pennant Breakout.

Further strong volume indicators with the Index breaking out of the Pennant pattern into new all-time highs. The strong high range close last Friday is indicative of a Bullish move underway that is potentially going to continue out to the 8000-point level. Traders should monitor this breakout for a retracement retest of the top Pennant level of 7650; a further close below the short trendline would set a further Bearish signal.

Indicator: Relative Strength 14

The Relative Strength Indicator (14) turned higher into the close on Friday, as the Relative Strength Indicator had a swing higher to move towards the 70-level following the sell divergence signal discussed 5 weeks ago, the current close heading towards the 70 level or over remains the play for this week. However, this is the level where traders should be looking for a further sell divergence as the RSI is yet to move over the high (70) of 4 weeks ago.

Comments last week: The Daily view of the Index highlights the consolidation taking place above the 7540 level and value remaining above the short-term trend line offers a bullish view for further gains. Last Thursday/Friday set a higher low inside this pattern also marking a 3rd low point, a strong indication the pattern is complete and a further breakout should be expected this week. High volumes at the low indicate strong off-market positioning as the high volumes have not impacted price.

S&P 500 WEEKLY
Price structure: Hangman remains.

The S&P index exponential movement is supported by only a handful of dual listed (Nasdaq) stocks in the Index, traders should use caution around being “late buyers”, the Hangman of 3 weeks ago still remains valid as a reversal indicator going forward. A weekly close below the short trendline and the 500 level will alert trades to a potential top in place.

Indicator: Relative Strength Indicator 14

Relative Strength has again turned higher and moved over the 70 level, but to remain a strong momentum signal, the RSI should continue a move over the 70 level with the underlying price advances. In the coming weeks traders would monitor the RSI for a bearish divergence signal as any Index price consolidation towards the 4818 level may re-assert a bearish RSI signal as the indicator would turn lower towards the 70 level and below.

Comments from last week: The Weekly view shows a strong range high close bar indicating a very bullish move is underway following the lower “retest” of the key support level developing at 5030 points. The index movement is supported by only a handful of dual listed (Nasdaq) stocks in the Index, traders should use caution around being “late buyers”, the Hangman of 2 weeks ago still remains valid as a reversal indicator going forward.

SPX DAILY
Price structure: Sell divergence developing.

As the Index moves further away from the 200 day moving average, to again set an all-time high, the potential for a corrective move back into the open Gap area at 5000 points remains. Last week’s consolidation above the Gap area is a positive for further gains in the short term following the small “hammer bar” of last Thursday. 

Indicator: Relative Strength Indicator 14

Relative Strength Indicator remains below the 70 level indicating slowing momentum. Although not a signal of over brought, the current second and third movement ( January – February) into this over 70 level is often seen as a level to take profits as seen during July 2023 and December 2023. The potential Sell divergence signal has again developed with the RSI line setting a new lower high.

Comments from last week: The good news “GAP” set last Thursday may indicate the “exhaustion” Gap as the Index value extends further away from the 200-day moving average. With price action now testing the short term trend line the upward momentum is slowing, with a sharp reversal possible in the Daily chart. Positive price “momentum” is slowing (see RSI notes) suggesting the current price movements are not showing a board based support from the buyers.

NASDAQ DAILY
Price structure: Continuation breakout.

As the price movements diverge further from the 200-day moving average, the potential for a corrective movement back to a key support level remains. The current breakout over the 18,060 level is a strong signal for continuation for this week. With the underlying Primary UP trend remaining in place the current breakout over resistance is the continuation move the Buyers need. Key support this week is the 18,060 breakout point. The prime driver is Nvidia closing at $823.0, and the AI based stocks gaining value, however the rise in the Index value is not broad based.

Indicator: Relative Strength 14

Relative Strength has again moved towards the 70 level; this remains an area to monitor for further exhaustion reversal to move below the “sell line”. The observance is the overall Relative strength is again, bullish for now, however the failed 4th   attempt to move over the 70 level is often a signal of exhaustion. The RSI should now be monitored for a further movement lower indicating a change of momentum, this may provide some early insight to trend failure.

Comments from last week: The Fake out (FO) set last Friday is the key observation of an “Island top” developing. High correlation occurrence before a reversal takes place as the last of the buyers enters the market. Profit-taking is now the highest concern for traders in this Primary UP trend. As the Index extends the distance away from the 200 day moving average, the risk of a sharp profit taking movement remains high.

USD Spot GOLD – DAILY: All-time closing high with Bullish move.

As discussed last week the closing price over $2072.0 now sets the target to retest as $2135.0, the spike high area from the 4th December 2023. Breakouts from long consolidation areas tend to be decisive moves confirmed by Friday’s impulsive range. This week a retest of the $2135 high may find some significant resistance at this level as December buyers see a way out.

Indicator: Relative Strength 14

The RSI is turning higher from below the key 50 level set during February, with the reversal in price, this breakout higher has moved the indicator higher to the 70 level, the Relative Strength reading below 50 indicates bearish momentum. Long-term traders should continue to monitor this Daily chart for a 5th major yearly top in progress at the $2135.0 level with further declines in the long term.

Comments from last week: As discussed last week, gold has moved higher to retest the $2049 level with an OPu outside range now in place from last Friday’s close. Gold remains range bound between $1982.0 and $2049.0 so any breakout higher or lower would be an important observation. Should the price continue over this resistance level, a further close over the key $2072 level would be a very bullish indication for further gains this week.

AUD Spot GOLD – DAILY: All-time high, very Bullish.

The Australian dollar Gold price has set a new all-time high as part of the overall Primary UP trend in place. This is very bullish for local Gold mining players NST, EVN and NEM along with GOR. The initial support of $3024 has set the base for the current continuation of Trend with an impulsive move away from consolidation. Note is the $AUD value remaining around the $0.62- 0.65 cents and the $USD gold price advances is a critical observation and needs to be maintained to provide price support for the XAUAUD chart. For traders weakness would see price move back to retest the $3150 breakout level.

SILVER
Price structure: Bullish flag breakout

Last Friday Silver set an impulsive range against the developed bull flag pattern. Traders look for a further gain over the $23.60 level to confirm the current bullish move underway. Silver remains within a consolidation area, however the 3 tests towards the $21.90 level shows strong support at this level the retest of the $22.50 level and Friday’s move higher confirms a higher low in place and the basis for a new Primary UP trend developing.

Relative Strength 14

Current Relative Strength has turned higher above the 50 level, indicating momentum has turned early Bullish, if the RSI continues higher, the earlier divergence signal has given way to a strong Buy signal. Only a continued move higher would reflect a solid change in the underlying price momentum and should alert to a potential new trend and breakout.

Comments from last week: During the past week Silver has again tested the $22.50 level for support with a high range close set on Friday. The overlapping bars pattern is Bullish with a breakout higher expected.  The $24.60 level remains as resistance and a further retest of this level should be expected as part of the large 12-month consolidation taking place. This week a close over $23.50 would give a bullish view for further gains.

AUSTRALIAN VOLATILITY INDEX: The equities traders compass.

The current volatility closing value has moved to close above the 11 level following a move towards the 13 level. The closing value indicates the XVI remains within the “bullish” level. 

With the indicator moving higher early in the week, the forward pricing of PUT options (insurance) was increasing, this is observed against a rising market indicating equity price movements may turn bearish as the cost of 3 month (insurance) Put Options is increasing suggesting the market is moving to a protect profits mode.

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

The cost of 3-month forward PUT options is decreasing 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 as forward price changes, this “skew” in pricing is measured in this XVI.

The XVI value works as an inverse correlation to the underlying market.