XJO WEEKLY
Price structure: Consolidation

The mid-week decline to retest the 8385 level was quickly rejected, leading to a strong recovery. This resulted in the index closing at the higher end of the range, and specifically at the current resistance level of 8515 points.

Buyers remain in control of this 12 Month Primary UP Trend largely driven by gains in the financial sector and strong gains within some leading Industrials. Eg WES, CSL, and BSL

Indicator: Relative Strength 14:  Remains Bullish

Relative strength has turned sideways 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 further 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 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 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.

XJO DAILY
Price structure: Trading range.

The Daily chart highlights the growing trading range with 8514 being set as resistance and 8083 indicating longer term support. The Index has set a reversal and new higher low at the internal support level of 8385. A further breakout higher would be a significant development as support for the top Stocks in the XJO 200 continue gain support. Both ANZ and WBC are yet to trade a new all-time high enjoyed by their peers. The current weakness in the $AUD should continue to underpin the resources sector. Of note is the declining volumes last week often associated with larger investors moving to the sidelines.

Indicator: Relative Strength 14:

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

Comments from last week: 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.

S&P 500 WEEKLY: Continuing resistance 

As described last week the 6100-point level continues to provide resistance, with the current 12 month upward trading channel remaining intact, indicating Buyers remain supportive. This resistance level may serve at providing a critical threshold for future price advances, however a successful breakout above this level potentially triggering substantial buying interest and driving the Index to new highs within the very strong upward price channel remains the preferred view.

Indicator: Relative Strength Indicator 14.  Divergence failure

The Bearish Divergence remains in the Relative Strength Index (RSI) and is signalling declining price momentum, again this week no follow through lower has taken place. This occurs when prices continue to rise or consolidate, the RSI trends lower, indicating subsiding momentum and the potential for lower prices.

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

Comments from last week: 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.

SPX DAILY Price Structure: 2nd Dark Cloud

An almost identical 5 days of price action to the previous week. Both the Dark Cloud and the Outside period down close (Opd) are reversal signals when viewed in both the Weekly time frame and this Daily view. The 6100 level has now been tested on 4 occasions with immediate rejection. It should be noted the rejection at this level has failed to follow through lower, other than to build a strong support level along the 5800 level. The underlying Primary UP trend remains in both the Weekly and Daily time frames.

Indicator: Relative strength 14. Weak Divergence

The Relative Strength Indicator (RSI) continues to move over the key 50 level, suggesting that with the consolidating prices, momentum remains neutral. If the RSI falls below the pivotal 50 level, it will likely confirm a bearish outlook, leading to further downside targets and a potential retest of the 5800 level.

Comments from last week:  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.

NASDAQ (100) DAILY Price structure: Outside range

The outside period set last Friday was a notable event, as it marks an immediate and significant shift in market sentiment. An outside period, which occurs when the high and low of the current period exceed the high and low of the previous period, often signals a potential reversal of the current short-term trend. The Tech heavy Nasdaq 100 remains in a consolidation phase as market participants access the importance of current AI developments in China and the potential impact on the US tech industry. With the current 200 day moving average still rising a retest of this moving average would not be out of the question at 20,000 points suggesting a 5% decline from current levels.

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: 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.

USD Spot GOLD – DAILY: Exponential movement

USD Spot Gold has developed an exponential price advance following the breakout above the $2790 level. This upward momentum is reflective of significant bullish sentiment in the market, driven by strong investor demand and positive market dynamics. The finish last Friday prior to trading at an all-time high price and above the key $2800 level further underscores the prevailing strength. While the bullish outlook remains firm, traders should be cautious of potential pullbacks towards the $2790 breakout level following the Fake out range (FO) set last Friday. Typically, prices may retrace to retest significant breakout points, but a close below this level could indicate a shift in the current bullish 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 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.

AUD GOLD – DAILY: Primary UP Trend.

The strong price trend in this chart is based on the weaking Australian Dollar and further advances in the $USD Gold price. As the Australian dollar consolidates around A$0.62 cents the current advance over the $4,500 level is being driven by the USD Gold price. This current price trend remains on target to reach $5,000 oz. Australian Gold producers will benefit in rising cash flow and remain a Buy for diversified  portfolios.

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.

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.

SILVER Price structure: Key levels in play

Silver is not in a price Bull market but remains within a large consolidation zone and currently respecting the $32.50 resistance level originally set in May 2024. The October 2024 breakout towards $35.0 remains a false break and has left buyers of that period in a losing position. With last Friday’s Fake out (FO) range closing towards the opening price of the week, profit taking at this level remains a constant for traders. Buyers should remain vigilant for a breakout above $32.50 as a potential retest of the $35.0 level where more selling may take place.

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, but declining from the high 60’s momentum point.  This indicator should be monitored for a Sell divergence signal, completed with a continuing closing price below the $31.50 level.

Comments from last week: 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.

AUSTRALIAN VOLATILITY INDEX:  The equities trader’s compass.

The current volatility closing value has closed below the key 11 level following a large 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 mid week higher 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. Volatility rules in this current XJO200 consolidation phase.

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.