XJO WEEKLY
Price structure: Fake out + OPd

The Fake Out (FO) discussed last week has played out with a reversal in the form of an outside period (OPd), with the price remaining within the ascending wedge pattern. The potential flowing an OPd is for further follow-through lower in this chart to retest the 7632 level. The underlying Primary trend is UP; however, the observation is that price action remains in a developing consolidation area above the 7632 level. To remain bullish, a close over the 7900 level is required.

Indicator: Relative Strength 14: Divergent

Relative Strength remains above the 50 level again as part of the overall directional move. Only further movements towards the 70 level will remain a bullish signal for further gains. Last week, the RSI value moved lower, which is in line with the current price consolidation. However, a new indicator high is required over the late Q4-2023 high point. A new divergence signal has developed at this level and should be monitored for further declines.

Comments last week: The underlying Primary trend remains UP, with current price action not indicating a meaningful reversal pattern until a close below 7632 takes place. Last week, again, set a fake out high (FO) where the price moved over a previous reversal high of three weeks prior. A weekly closing price below the 7853 level would indicate a top in place. The bigger picture indicates a Bearish wedge developing as the price range narrows.

XJO DAILY Price structure: Low volume support

The expected decline discussed last week has followed through lower to test the short trendline. Last Friday, the close well of the lower bar suggested buyer support or a short cover before the weekend. The overall price structure is becoming more Bearish as the larger range sessions are down close days, indicating a lack of support. On a positive note, the volume study indicates a lower volume session into Friday’s close, which is a bullish signal. Traders would look for a daily close over 7900 to remain bullish.

Indicator: Relative Strength 14:

The Relative Strength Indicator (14) has turned lower into the close on Friday, the overall decline in momentum as a result of the larger price consolidation developing. This is the level where traders would be looking for a further sell divergence as the RSI has set a lower high.

Comments from last week: The daily breakout on the last trading day of the month should be viewed as a window. Dressing for the quarter, with the potential to immediately reverse. Short declines are helpful within a trending market and offer many trading opportunities. The current “tentative” trendline remains intact and should be viewed as a potential support point in any future decline. A close below this line would give a bearish signal for a retest of the 7540 level. The index indicates that broader support may be developing at the smaller end of the 200 listed companies.

S&P 500 WEEKLY: Very Extended move and Outside range

An outside week with a strong lower shadow may see a further extension of this already overextended move, now 22% from the early November 23 low. At this point, it would be a late entry for buyers, a profit-taking event taking the Index back to the 4920 – 4818 level to test support in this current bullish move. Historically, the third quarter is bearish for stocks, leading into the May period for more declines.

Indicator: Relative Strength Indicator 14

Relative Strength has turned lower as the momentum indicator remains 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 will 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 will turn lower towards the 70 level and below.

Comments from last week: The current weekly close adds to the already extended move underway. The short-term trendline could be monitored for the first breakdown level. The first Weekly support level remains at 4920. Historically, the third quarter is bearish for stocks, leading into the May period for more declines.

SPX DAILY Price structure: Consolidation

Many short-range trading days have dominated the recent price action, but now, dominated by the OPd set last Thursday, this may be the early bearish signal to take notice of. The inside range set on Friday is the key bar to monitor for a price movement below the low of 5157. This setup can be very bearish in the early part of this week. A lower price break would set up a retest of the 5000-level “Gap” area.

Indicator: Relative Strength Indicator 14

The Relative Strength Indicator remains below the 70 level, indicating slowing momentum, and is currently turning lower to touch the 50 level. The recent 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 Sell divergence signal has now played out, and the RSI touching the 50% level and turning higher may see a continuation in the coming days.

Comments from last week: Overlapping consolidation in the shortened week has narrowed the “Wedge” pattern further. The potential for a decline into the 5000 point remains to fill the “Gap.” A close look at the price bars shows the Daily movement is a mixture of small range up closes and down closes, showing overall indecision from traders at this extended level.

NASDAQ DAILY Price structure: Consolidation.

Sideway consolidation is well developed, with a significant support level of 17,790 points, which is the key level for the Bulls to hold in the coming days. As with the S&P500, this chart is dominated by the OPd and follows the inside range set on Friday. As the current trading range is well developed, a break to the lower side would be a swift movement as stops and losses are taken.

Indicator: Relative Strength 14:

Relative Strength has moved sideways below the 70 level and is now moving to the 50 level. The observation is that Relative strength has turned bearish overall for now. The failed fourth attempt to move over the 70 level is often a signal of exhaustion. The RSI should now be monitored for further movement lower below the 50 level indicating a change of momentum. This may provide some early insight into overall trend failure.

Comments from last week: The Daily view of the Nasdaq shows further consolidation developing below the 18,428 level, with support developing at 17,790. Consolidation does not change trends but can offer some insight into the commitment of longer-term holders if a breakdown occurs lower in the support level. Seasonal weakness is ahead into the third Quarter.

USD Spot GOLD – DAILY: Outside range OPu

The Outside range bar shows the sellers setting a new low and the buyers setting a new high. This is where buying must continue to meet the breakout extension price target of $2348.0. It is acknowledged that Gold remains a “hedge” against inflation and Global uncertainty. Without a solid catalyst showing, profit-taking may enter the market and set a new retracement back to the Trendline or test $2222.0 as support.  The potential for a multiyear top remains.

Indicator: Relative Strength 14

The RSI is turning sharply higher from below the key 70 level set late March with the reversal in price, with this breakout higher moving the indicator above the 70 level, but has not set a new high in line with price making a new high. The Relative Strength is now showing a bearish divergence signal. Long-term traders should continue to monitor this daily chart for a 5th major yearly top development at the $2240.0 level with further declines in the long term.

Comments from last week: Statistically, Fake-Out (FO) movements reverse with the next 1-3 trading periods. This type of FO has closed outside of the resistance point and has the potential to continue to set higher prices. Gold remains within a Primary UP trend with a short-term valid trendline now in place. This now sets the stage for further gains in the underlying Gold equities market and offers traders an opportunity to participate in the current bullish run.

AUD Spot GOLD – DAILY:  Continuing Impulsive moves.

A parabolic move best describes $AUD Gold’s impulsive movement higher. The key is the consolidating $AUD around $0.6521 -$0.6578 with a rising $USD Gold price. This remains very bullish for local gold-producing companies. Australian-based Gold producers sell in Australian dollars: NST, NEM, GOR.

Comments from last week: A new high for $AUD Gold on an impulsive move (large range), with $USD gold setting new highs while the $AUD remained stable at 0.6520 cents. This remains very bullish for locally producing Gold companies. Australian Gold producers sell in Australian dollars. Based on the observations (above) in the $USD Gold price, the strong price movement remains at risk of decline.

SILVER Price structure: Outside range at resistance

From the Pivot buy signal, Silver set 2 very strong impulsive ranges, only to finish the week with an outside range that suggests the short-term top is setting up below the May 2021 resistance of $28.80. The retest of the $26.20 level has not shaken the resolve of the Buyers with the session closing at the high. Outside ranges have a high statistical outcome for marking high points within the next 3 bars. A Daily closing price below $27.00 would give the first indication of a reversal underway.

Relative Strength 14:

Current Relative Strength has turned higher above the 50 level and reached the 70 level, indicating momentum has turned very Bullish. If the RSI continues higher, the earlier bullish divergence signal will give way to a strong Buy signal. Only a continued move higher and over the 70 levels would reflect a solid change in the underlying price momentum and should alert to a potential new trend and breakout.

Comments from last week: As Gold makes new highs, silver remains in the background holding support at $24.60 and setting a pivot point (BUY) signal off support. Currently, the support level of $24.60 and the resistance level of $26.20 may provide a consolidation area for current price action. Many are calling for a Bull market in the PM; technical traders will be aware Silver remains within a 2-year trading range. The close last week at the $25 level is a bullish signal for continuation this week; sentiment within the sector remains strong, and traders should look for buy opportunities.

AUSTRALIAN VOLATILITY INDEX:  The equities traders compass.

The current volatility closing value has moved above the 11 level following a move below it. This closing value indicates that the XVI remains within the “bullish for Equities” level. 

With the indicator moving higher early in the week, the forward pricing of PUT options (insurance) was increasing. This is observed against a falling 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 the 3-month forward pricing of ETO Options against the 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.