XJO WEEKLY
Price structure:  Primary Trend breakout

From consolidation comes the Bullish breakout, the close in the high section of the range indicates a committed move from the buyers. The week posted a strong range low to high over the previous “inside period” (IPu) and remains larger than recent ranges contained within the 6 month consolidation pattern.  The index is poised for further gains with 8000 points as the short target with 8188 points as the measured target. Primary Trend is UP.

Indicator: Relative Strength 14 –  Bullish

Relative Strength has turned higher as part of the breakout movement. Only further movements towards the 70 level will remain a bullish signal for further price momentum. Should the RSI reading move below the 50 level, the strong indication is for negative momentum to develop leading to Trend failure.

Comments last week: Last week the Index set a higher low and closed the week at the high range, although an Inside Period (IPu) the outlook remains bullish for a retest of the 7910 resistance level. With 23 weeks of trading above the 7632 level, within a 278-point range, the consolidation zone is without a Bearish pattern. A further breakout above the 7910, has the potential to lead to a broad based rally. Stocks with strong dividend returns would be favoured in the July rally.

XJO DAILY
Price structure: Pennant complete.

Strong primary movements show Buyers in control as the Index value moves above the 7910 level. The broad based rally in the Financials (XFJ) has lifted the index into a breakout move away from the 200 day moving average. For a continued move higher the other major contributor mining stocks (BHP FMG RIO WDS) along with Industrials (WES TCL BXB)  must continue to rally as confirmation of underlying support leading to further  broad based rally.

The Industrials have total return on average of 22% over the past 12 months, a positive for further gains.

Indicator: Relative strength 14: Bullish

The Relative Strength Indicator (14) has turned higher into the close on Friday, the overall increasing momentum is a result of the breakout price movements. This is the level where traders would be looking for a further buy signal above the 50 level, but with a reading at or below the “50” level, the potential for a Bearish reversal remains a concern.

Comments from last week: The “Pennant” pattern discussed last week continues to develop into a breakout higher with the 3rd low (3) now confirmed. The strong impulsive movement last Thursday followed by the short range set on Friday’s close indicates a follow though has the potential to retest the 7910 level and make a break towards 8000 points. The consolidation period now extending to over 6 months, may develop into a new Primary UP trend.

S&P 500 WEEKLY: Extended advance

The S&P500 has again made an extended advance but on a shorter-range low to high. A very strong Primary UP Trend in place, with minimal price overlap to the previous bar indicating buyer in full control. The potential remains for a short-term profit-taking corrective price move to retest the 5270 level to confirm buyer support.

Indicator: Relative Strength Indicator 14. Bearish divergence

Relative Strength has turned higher as strong price momentum continues. With the reading moving over the 70 level, and turning higher, momentum is strong. A turn lower back towards the 70 level and the key 50 level, with any Index price consolidation towards the 5400 level may re-assert a new bearish RSI signal.

Comments from last week:  The S&P500 has set an extended Bullish Weekly range low too high to again, set a new all-time high. The expected rejection of higher prices following the prior week setting a long upper shadow has not followed through. This can only be described as an extended move, the concern remains the Index is being driven higher on a few Tech stocks. Without a broad based rally the underlying momentum can change very quickly.

SPX DAILY
Price structure: Short consolidation.

As the Index advances the Outside range down close (OPd) set last Thursday was quickly reversed to set a new all-time high. Closer inspection shows the Friday close lower than the OPd high. Historically this Daily chart shows the OPd preceding short consolidation periods as the market comes into balance following an extended range bar. The underlying trend remains UP, however current price movements are extending away from the 200-day moving average.

Indicator: Relative Strength Indicator 14

Relative Strength Indicator has moved above the 70-level and back to this important level indicating a decline in Bullish momentum and is currently turning sideways (Friday) from above the 70 level. A continued move lower below the “70” level would be a bearish signal with the expectation of further declines. Relative strength is a momentum indicator, a swing back towards the key 50 level would be a Bearish signal that should not be ignored.

Comments from last week: The OPd discussed last week has failed to set the Index into consolidation or see any decline towards the “GAP” area below the 5400 level. Index Daily movements have set a “Primary” move in place, extending further away from the 200 day moving average. Historically this type of movement has continued to set higher prices. Without a reversal pattern in place the Index targets 5600 points.

NASDAQ (100) DAILY Price structure:  Consolidation.

The strong breakout above the 20,000 level is indicative of strong underlying momentum, last Thursday’s “retest” move failed to fully test this level with Friday’s reversal higher. Grouping the past 5 trading days it appears the Nasdaq (100) is consolidating above this important level. This is a similar pattern to the breakout above the 18,464 level during May 2024. Traders should expect further consolidation in the coming week.

Indicator: Relative strength 14:

Last week, saw the momentum indicator turned lower to be below the key 70 level. The RSI could now be monitored for a Bearish divergence signal with a movement lower below the 70 level towards the 50 level confirmed, indicating the first slowing of bullish momentum move is underway, this may provide some early insight to overall Primary trend reversal. Relative strength moving higher above the important 70 level shows Bullish momentum remains strong (not over brought).

Comments from last week: With a strong advance in the Nasdaq the Bearish OPd described last week has failed to consolidate the price movements at the 20,000 level. The Index has set a Bullish Primary movement, extending the Index further higher away from the 200 day moving average. A price decline finding support at the 20,000 level is a Bullish pattern and may see the market extend further towards 21,000 points. The underlying movements are being driven by the Technology sector with approximately 45% of stocks above the 50 day moving average.

USD Spot GOLD – DAILY: Bullish retest underway.

Gold is “retesting” the $2431.3 level as part of the overall trading range. Traders should look for resistance again at this important level. A breakout and close above the $2431.3 level would be very bullish for further gains. Inspection of this Daily price shows minimal price declines within this current advance from the $2288.0 retest two weeks prior. A breakout from this resistance level sets an extended target of $2550.

Indicator:  Relative Strength 14 Bullish

The RSI is turning higher, and has closed above the key 50 level again.  The Relative Strength is a momentum indicator and has turned positive at these levels indicating real price momentum over the current 14 day look back period has moved to a positive reading.  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: The final bearish flag has failed with the price movements now trading higher away from the descending pattern. The $2288.0 level is now a Major support level. The strong range low too high set during last Friday’s trading could be expected to follow through to higher prices this week. Gold remains within a large trading range with the resistance level at $2431.0 remaining the key resistance level for buyers to maintain control and set a new breakout.

SILVER Price structure: Neutral

The current retest of the internal resistance level of $31.50 may be considered a Bearish  move as an immediate reversal took place into Friday’s close. Without a close over the $31.50 level, Silver looks set to consolidate further below this level. The market is in “balance”, as neither the buyers or sellers have an edge at this level, a close over the $31.50 level targets the all time high resistance of $32.50.

Relative Strength 14:

Currently the Relative Strength is moving above the 50 level, indicating price is now playing out into a buy signal. Friday’s close saw the indicator turn lower, only a continued move higher and over the 50 level towards the 70 level would reflect a solid change in the underlying price momentum as the Primary UP trend looks set to continue. 

Comments from last week: Silver has set an impulsive breakout move from the now failed Bearish flag pattern discussed last week. The retest of $28.80 has established this level as a strong support level for potential future retracements. Silver again targets the $32.50 resistance level as the metal remains within a developing consolidation zone between $28.80 and $32.50. The current breakout moves away from the potential for a Primary Downtrend to develop.

AUSTRALIAN VOLATILITY INDEX: The equities traders compass.

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

With the indicator moving lower early in the week, the forward pricing (Volatility) of PUT options (insurance) was decreasing, this is observed against a bullish market indicating market participants believe equity price movements may turn higher, as the cost of 3 month forward (insurance) Put Options were slowly decreasing, suggesting the market is moving towards an active early bullish outlook.

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.