XJO WEEKLY
Price structure: Testing support 3 times.

The XJO Index now shows 3 spike low points testing the 7632 level. With support building at this level, a further breakout higher with potential to retest the 8148 level . The Australian reporting session gets underway this week, this will be the sentiment driver over the next month for equities. The large range bar high to low with the high close around 50% of the range shows buying at a low price off the support level.

Indicator: Relative Strength 14 – Neutral to Bullish

Relative strength has turned lower in line with the long range price action for the week, but remains above the key 50 level as a result of movement within the previous 14 bars. Only further movements higher towards the 70 level can 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: 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.

XJO DAILY
Price structure:  Pivot reversal

The large impulsive price movement set last Monday testing the 7700 daily level is currently being tested higher with a new “Pivot point”, set on Friday above the 200 day moving average. First resistance level at 7860 is the key level for the Index to surpass before momentum can be called Bullish. As buyer sentiment is damaged during a large range decline the move higher can be laboured.

This week should a close be set below the 7700 level long positions will come under pressure to sell.

Indicator: Relative strength 14: Bullish

The Relative strength Indicator (14) has turned higher into the close last Friday, the overall indication over the past Month is decreasing momentum because of the divergent breakdown in price movement last completed last Monday. 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:  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..

S&P 500 WEEKLY: Gap Open Buy

The Gap open buy signal indicates a full “price gap” on the open, with price immediately moving higher to back fill the Gap, this is a very bullish set up for further gains. A further Weekly close over 5358 the high of the range would complete a further Bullish pivot point. The underlying Primary trend remains UP. Current price volatility is strong, should a price close below the 5100 level long positions should be closed.

Indicator: Relative Strength Indicator 14. Bearish divergence

Relative strength has turned sharply lower as strong price momentum has given way to a bearish 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 with any Index price movement towards the 5000 point level will re-assert a full bearish RSI signal. 

Comments from last week: 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.

SPX DAILY Price structure: 200 day average retest underway

With market news around potential over brought valuations in Tech stocks and the reversal of the Japan/ US carry trade, the S&P has set numerous price gaps. Last Mondays open moved to retest the Gap at 5100 points level and the 200 day moving average. Last Wednesdays down day can be regarded as the retest of the Monday low. The Gap at 5400 points remains the key target for the open this week otherwise the current 5 day structure may be shown as a Bearish flag pattern with a lower close below the 5100 level.

Indicator: Relative Strength Indicator 14

Relative strength Indicator has moved below the 50 level and turned higher into 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 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.

NASDAQ (100) DAILY Price structure: 200 day average retest.

With last Monday’s opening Gap met the 200 day moving average and closed the 17,500 point Gap area. Current price developments suggest a Bearish flag is developing in this initial price movement higher from the 17,800 level.  Confirmation of this pattern will be a Daily close back towards the 17,800 level or lower. This current decline has wiped the majority of the 2024 gains in the Technology Index.

Indicator: Relative Strength 14

Last week saw the momentum indicator turn higher from the key 30 level in line with current price movements. As the Relative strength remains below the key 50 level, momentum will remain Bearish. Relative strength moving higher above the important 50 level is required before a Bullish momentum signal can be declared. This will provide some early insight for Major Primary UP trend continuation.

Comments from last week: 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.

USD Spot GOLD – DAILY: Continuing channel

USD Gold set a bullish pivot point into the close of last week in the process also set a higher low swing point (HL). With the current close on the upper $2431.3 resistance level continuation could be expected. This week should a further close be set below this important level, Gold can only be set for further consolidation. A further close below the $2393.0 level would set a very bearish tone.

Indicator: Relative Strength 14: Neutral

The RSI is turning lower and had 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 Bearish. 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: 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.

SILVER Price structure: Primary downtrend.

The OPu (Outside period up close) is an important reversal signal often marking a swing low point. Silver remains within the confines of a Primary down trend setting lower high and lower lows.  Before an indication of Bullish momentum can be declared, a close over the $28.80 resistance level is required, with any follow-on swing low setting a higher low above the $27.0 level.

Relative Strength 14:

Over the past 3 months the Relative strength has steadily declined and is now moving below the 50-level moving towards the 30 level, indicating a sell signal. Last Fridays close saw the indicator again 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 $27.00 support level. The Primary UP trend has ended into consolidation.

Comments from last week: 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.

AUSTRALIAN VOLATILITY INDEX: The equities traders compass.

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

With the indicator moving higher, 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 3month 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.