XJO WEEKLY
Price structure: Testing support

Last week the Index set a new all time high with immediate rejection back towards the 7910 support level. This type of Fake out (FO) or Bull trap where the nearby high of Three weeks ago is breached with immediate rejection is now a developed Bearish pattern that can result in further Gap down movements. The Index continues to develop into a trading range, the underlying Primary Trend remains UP. Lower support level of 7632 points may be tested again in this consolidation range. A large part of the current rejection comes from declines in the financials sector as profit taking sets in from the recent bullish run.

Indicator: Relative Strength 14 – Neutral to Bullish

Relative strength has turned sideways in line with the consolidating price action, and remains above the key 50 level as a result of this current breakout movement within the previous 14 bars. Only further movements towards the 70 level set a bullish signal for further higher price momentum.
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: Following the inverted hammer bar of 2 weeks ago, further high price rejection saw the Index (market) trade lower below the key 7910 level. How-ever the close of last week remained above this key level and above 50% of the whole weekly range high to low. This is a bullish outcome in this longer-term time frame, and suggests further movement higher is possible. The key this week is for the buyers to defend this new 7910 support level on the close of this week.

XJO DAILY
Price structure:  Pivot reversal

As discussed last week the retest of the higher level of 8083 took place in early trading leading to immediate selling to confirm a reverse Pivot Point set last Friday. The move lower last Friday is described as impulsive (large range high to low) with the close well below the key 8000 point level. The next lower support level is 7860 points, this first level remains the first area for Buyers to defend. A further close below 7860 points sets up 7700 points as the key support level to hold.

Indicator: Relative strength 14: Bullish

The Relative strength Indicator (14) has turned lower into the close last Friday, the overall indication is decreasing momentum because of the breakdown in price movements last  Thursday and Friday. This is the level where traders would be looking for a further sell signal  should a reading occur at or below the “50” level as a result from further selling. Overall the Relative strength has remained along the “50” level this year from January indicating neutral momentum.

Comments from last week:  The daily view of the Index shows only one close (Thursday) below the 7910 level at 7860 points. The volume study shows no outstanding volumes above the 1Billion level on the retest suggesting an orderly market movement. In the XJO Volumes above 1B indicates strong buying. Last Friday closed above the “midpoint” of Thursday indicating buyers entering the market and the completion of a bullish a,b,c pattern. Looking forward, the potential is a retest of the 8083 level is underway.

S&P 500 WEEKLY: Wedge pattern breakdown

The breakdown below the Wedge pattern was completed with a large range high to low price movement, this removes 8 weeks of gains. Traders could expect further declines as further selling may shake the resolve of the buyers. To remain Bullish support should be found before the 5000 point level in the form of a reversal bar or reversal pivot point. The underlying Primary trend remains UP.

Indicator: Relative Strength Indicator 14. Bearish divergence

Relative strength has turned sharply lower as strong price momentum has given way to a reversal. With the reading recently moving over the 70 level, and turning lower, momentum is changing, with the RSI setting a “lower high point” as the Index posted a new high, the Bearish divergence signal is now in place. A turn lower towards the 50 level and the key 30 level, with any Index price movement towards the 5000 point level will re-assert a full bearish RSI signal.

Comments from last week:  The “outside range” discussed last week has played out to find support at the developing short trendline. The rising wedge pattern remains in place, a further price movement below the trendline would send a very strong bearish signal for further selling. It is important to observe the past 2 weeks of the declining Index value covers 4 weeks of gains. The underlying Primary trend remains UP.

SPX DAILY Price structure:  Bearish Gap fill

The a,b,c movement discussed last week did result in a short rally to close the Gap at the 5500 level, the final OPd outside period set last Thursday has followed through with another Gap lower indicating sellers in full control. The internal support level shown at 5266 will be the key level to hold this week, a close below this level opens up the chart to a full retest of the 5000 point level resolving the first Gap set during May 2024.

Indicator: Relative Strength Indicator 14

Relative strength Indicator has moved below the 50 level and turned lower last Friday, traders should consider a further close below the 50 level as a strong Bearish signal. With a continued move lower below the “50” level the expectation of further declines remains. Relative strength is a momentum indicator, only a swing back higher towards the key 50 level would set a Bullish signal that should not be ignored.

Comments from last week:  The Daily chart shows the orderly a,b,c price decline into the “Gap” below the 5400 level. The Inside period (IPu) set on Friday shows the market again in balance. This is a great technical setup for further gains but only on a Daily close above the IPu. Price failure at this level sets the 5266 level as the primary downside target.

NASDAQ (100) DAILY Price structure: Outside range

The failure of the Nasdaq to fully close the 19,500 point “Gap” with a further movement lower shows the Seller in control. First real support for the Index is the convergence of the 17,800 point level with the 200 day moving average. During July 2024 it was discussed the Index had become extended away from the 200 day simple moving average with the potential for a reversion movement.

Indicator: Relative Strength 14

Last week saw the momentum indicator again turn lower from the key 50 level. This may provide some early insight to an overall Major Primary trend reversal. Relative strength moving higher above the important 50 level is required before a Bullish momentum signal can be declared.

Comments from last week:  As with the S&P500 the Nasdaq (100) has closed the price Gap (18,722) during a Bullish a,b,c type decline. It should be noted 2 “Gaps have been left open during the decline that may be resolved at some point in the future. The Inside Period up close (IPu) set last Friday shows the market in balance at this level. The “Gap” showing at 19,500 points should be monitored for a retest of this level, a close over this level set the 20,000 point level as the retest target.

USD Spot GOLD – DAILY: Continuing channel

Gold has failed to set a new high with the price now setting an OPd reversal bar with the open close in a very narrow range shows indecision, not Bull market activity. To confirm the current UP Trend a close over the high of the OPd at 2478.0 is required. It is important to acknowledge the current closing price is above the $2431.30 level. A close below this level will confirm further consolidation within the current channel is possible.

Indicator: Relative Strength 14: Neutral

The RSI is turning lower and has moved below the 50 level but turned higher above the 50 level on the close of last week and remains above the 50 level.  The Relative strength is a momentum indicator, turning sideways at these levels is indicating real price momentum over the current 14 day look back period is moving from Bullish to consolidation. Long term traders should continue to monitor this Daily chart for a 5th major yearly top developing at this level with further declines in the long term.

Comments from last week: As with the Indices, Gold set an a,b,c pattern lower to set an Inside period last Friday showing the market in balance. The $2393.0 level is now the resistance level for the Yellow metal to reclaim with a solid close towards $2400.0 to remain Bullish. No trend is in place in this 4-month consolidation period. Should price rejection occur below the $2400.0 level key channel support at $2288.0 remains the downside target.

AUD Gold  Price structure:  Bullish for local producers

While the USD Gold price flounders in consolidation, the AUD Gold price has closed at an all time high as the $AUD declines towards $0.65c. Caution should be exercised at this level with a FO (Fake Out) bar now in place, the close inside of the April high of A$3794 is a short-term bearish signal. Currently this all-time high level is very Bullish for local producers, traders should be aware further declines in the USD Gold price or appreciation in the $AUD may lower the AUD price.

Indicator:  Relative Strength 14: Bullish

The Relative Strength is moving to the 70-level indicating strong price momentum, but it should be noted the RSI is a lower value against the April high, the potential for a bearish divergence signal to develop remains.

SILVER Price structure: Continuing Channel

The short price rally in Silver has again met resistance at the $28.80 area setting an OPd outside period down close. History shows the OPd is often the swing point for further consolidation in price. This type of price action is not Bull market activity, a further close over the $28.80 level would provide the buyers with confidence to hold for a retest of the $31.50 level. Silver remains within a technical Primary down trend.

Relative Strength 14:

Currently the Relative strength is moving below the 50 level moving towards the 30 level, indicating a sell signal. Friday’s close saw the indicator turn lower, only a continued move higher over the 50 level towards the 70 level would reflect a solid change in the underlying price momentum and confirm a reversal entry at this current support level. The Primary UP trend has ended into consolidation.

Comments from last week: Failure of price to hold the key $28.80 level puts the metal into a Primary down Trend. As with Gold the inside range set last Friday shows the market in balance. Traders should look for a close over the $28.80 level to remain Bullish in the short term. Without a closing price over the high of the Inside period the Trend remains bearish with $27.00 as next support.

AUSTRALIAN VOLATILITY INDEX: The equities traders compass.

The current volatility closing value has moved to close above the 13 value following a further move lower below the key 11 level on the Bullish start to the week. Current closing value indicates the XVI remains within the “Bearish for Equities” level. 

With the indicator moving higher later in the week, the forward pricing (Volatility) of PUT options (insurance) was increasing, this is observed against a Bearish market indicating market participants believe equity price movements may turn lower. 

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

The cost of 3 month 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 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.