XJO WEEKLY
Price structure: Hangman Weekly close

The Weekly range testing lower levels and closing towards the high indicates selling; this type of process can show in Weekly charts 1 or 2 weeks prior to a decline. Q3 2022 shows a hangman reversal following a Bullish fluid movement. With a lower high and Lower Low against the prior week, the structure can set a 3rd lower low back towards the 7400 level or lower. This declining structure will test the buyer’s resolve. Traders should consider further consolidation in the Index value as this Primary Up Trend begins.

Indicator: Relative Strength 14

Relative Strength remains above the 50 level again as part of the overall directional move higher in price. Only further movements towards the 70 level will remain a bullish signal for further gains, last week the RSI value moved sideways in line with price consolidation, however a new high is required over the late Q4-2023 high point.  A new divergence signal may develop at this level.

Comments last week: The closed top (no wick) hammer bar is an ideal setup for continuation; the retest of the low of the previous week shows buyers willing to enter the market on mid-week weakness. With the price closing over the important all-time high value of 7632, the momentum move has the potential to move prices higher. The current UP trend remains in place. From a Weekly perspective, a further close over this level would be very bullish going forward.

XJO DAILY
Price structure: Retest of the High

The bear flag discussed last week has played out to test below the 7540 level as a confirmed a,b,c pattern, with the pivot point showing buyers have again lifted the market and set a Bullish follow-on from the pivot point. A continuation pattern, heavy resistance could be encountered on the 2nd  of February high of 7700, the point of initial selling during this week. Consistent high volume at the Pivot point indicates buyer interest adding to the view a short covering event took place at point “c”.

Indicator: Relative Strength 14

The Relative Strength Indicator (14) turned higher into the close on Friday, as the Relative Strength Indicator had a swing to move towards the 50-level following the sell divergence signal discussed 4 weeks ago; the current close heading towards the 70-level remains the play for this week. However, this is the level where traders should be looking for a sell divergence as the RSI is yet to move over the high (70) of 2 weeks ago.

Comments last week: While the Weekly time frame shows an import close above the August 2021 all-time high. The Daily price chart shows a small bear flag developing during the last 3 trading days. A flag failure is possible to see the Index move higher in line with the Weekly view. In the short-term view (Daily) a retest of the 7540 level remains a possible outcome. In the Daily time frame, a close over the high of 7703 would indicate a flag failure and strength within the current Primary upward movement.

S&P 500 WEEKLY
Price structure: Hangman.

The S&P has set a Hangman in this Weekly view, with the low being set during the week only for the market to recover towards the high of the week. The low set at 5030 points now becomes interim support for the coming week. The Hangman shown in a Weekly chart has a very high statistical outcome of indicating a reversal 1-2 weeks in advance. On a break of the current short-term trendline, the next key level of support is 4818 points.

Indicator: Relative Strength Indicator 14

Relative Strength has again turned higher and moved 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 would 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 would turn lower towards the 70 level and below. 

Comments from last week: The risk of profit-taking remains strong and may lead to a sharp retest of the 4818 breakout level. It remains rare to find a string of strong range weekly closes stretching over 800 points. The move to an exhaustion top may be in play; an exhaustion move may run for many weeks until buyers start to profit, along with late buyers having to cover losses. A price break below the short term “trendline” will alert the trader a final top may be in place.

SPX DAILY
Price structure: Sell divergence developing.

The Daily view highlights the consolidation developing over the previous week. With the short trendline being tested during the week this will be the pivotal observation for traders this week, as a break of this line may offer an early indication of a price top in place. Given the extended distance current price, movement is from the 200-day moving average, any retracement should first be monitored for a retest of the initial breakout level of 4607 points.

Indicator: Relative Strength Indicator 14

The Relative Strength Indicator has moved back below the 70 level, indicating slowing momentum. Although not a signal of overbrought, the current second and third movement into this over 70 level is often seen as a level to take profits, as seen during July 2023 and December 2023. The potential Sell divergence signal has again developed with the RSI line setting a new lower high.

Comments from last week: The Daily time frame an early divergence signal may be developing, the recent moves are “gapping” higher indicating a buyer frenzy. As with the weekly view, a break of the short-term trendline remains the key observance during the coming week. The Daily trend remains firmly in a UP trend and has become an “extended move” given the distance away from the 200-day moving average is growing larger. Historically the Index has moved to “retest” the average, this now remains a strong outcome in the coming days and weeks.

NASDAQ DAILY
Price structure:  Sell divergence continues.

An exhaustion move is now underway and further upside may be limited until a price retracement ultimately tests the buyer’s strength. Many unresolved “Gaps” remain in the price structure. Following last Tuesday’s opening Gap down, the index has failed to find real buying strength closing lower for the week. The current Earning reports coming to the market remain consistent with a growing economy. As the reporting season comes to completion and stocks are re-rated a further direction movement has the potential to set new highs.

Indicator: Relative Strength 14

Relative Strength has again moved towards the 50 level, this remains an area to monitor for further exhaustion reversal. The observance is the overall Relative Strength is, again, bullish for now. However, the potential 4th movement over the 70 level is often a signal of exhaustion. The RSI should now be monitored for a further movement lower indicating a change of momentum, this may provide some early insight to trend failure.

Comments from last week: The current seasonal move in the Indices may extend further; however, as with the other Indices’ the Nasdaq continues an extended move away from the 200-day moving average. The strong range set last Friday suggests continuation this week, however an exhaustion move is now underway and further upside may be limited until a price retracement ultimately tests the buyers strength. Many unresolved “Gaps” remain in the price structure.

USD Spot GOLD – DAILY: Early Bullish move.

Gold has again retested the $1982.0 level with immediate buying lifting price back above the key $2,000 level. With the current price action remaining within a large consolidation zone, the current pivot point reversal has the potential to again retest the $2049-50 resistance level. Should the price continue over this level, a close over the key $2072 level would be a very bullish indication for further gains this week. 

Indicator: Relative Strength 14

The RSI is turning higher from below the key 50 level, with the reversal in price, only a breakout higher will move the indicator higher above the 50 and again higher to the 70 level, the Relative Strength reading below 50 indicates bearish momentum. Long-term traders should continue to monitor this Daily chart for a 5th major yearly top in progress at the $2072.0 level with further declines in the long term.

Comments from last week: “Nothing to see here” is the best summary of the current 3-month price consolidation. The observation of consolidation also indicates low price volatility. Traders will be aware that low volatility leads to high volatility. With the Primary trend in place from the October 2023 lows the expectation should be for a move higher to retest the December “spike high” point.  The current support level of $1982 remains the level to retest on a move lower. The price moving over the resistance level of $2049 will alert the buyers that a potential move higher is underway.

SILVER
Price structure: Early Bullish move underway

The two key levels in Silver are support at $21.90 and resistance shown at $24.60 and $26.20. The Silver contract this week closed at a 3 week high, ($23.50) in a very bullish move from the $21.90 key support level, some higher levels of resistance remain, the strong range bars set last Thursday and Friday suggest strong buying and a solid momentum move underway.

Relative Strength 14

Current Relative Strength has turned sharply higher above the 50 level, indicating momentum has turned Bullish; if the RSI continues higher, the earlier bearish momentum signal will give way to a strong Buy signal. Only a continued move higher would reflect a solid change in the underlying price momentum and would alert to a potential new trend and breakout.

Comments from last week: The two key levels in Silver are support at $21.90 and resistance shown at $24.60 and $26.20. Last Thursday the contract set an Outside period up close (OPu) indicating buyer support from the lows, this type of signal is highly probable of a swing point in place, with Stops set at the $22.0 low point.

AUSTRALIAN VOLATILITY INDEX: The equities traders compass.

The current volatility closing value has moved to close above the 11 level following a move towards the 13 level.

The closing value indicates the XVI is now within the “bullish” level. 

With the indicator moving higher early in the week, the forward pricing of PUT options (insurance) was increasing, this is observed against a rising 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.