XJO WEEKLY
Price structure: Rejection

With the Index setting a new high, selling has closed the week with a rejection “inverted Hammer” bar showing.  Importantly the close remains at an all-time high, suggesting some profit taking has taken place not a committed sell. The past resistance level of 7910 is now the support level for this week’s trading. A further close below this level puts the Index back into consolidation and sets up a potential retest of the 7632 level.   Primary Trend remains UP.

Indicator: Relative Strength 14 – Bullish

As a result of this current breakout movement, Relative Strength has turned higher and remains above the key 50 level. 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 and further consolidation.

Comments last week: 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 and 8188 points as the measured target.

XJO DAILY
Price structure: Bullish retest

During the past week the Index set a new high of 8083 followed by the rejection day last Friday. The retest towards the 7910 level with some late buying to lift the last trading day off the lows, this remains a very bullish setup. As discussed last week the Financials sector has contributed to the current breakout movement. The extended breakout target remains at 8188 points.

Indicator: Relative Strength 14: Bullish

The Relative Strength Indicator (14) has turned lower into the close on Friday, the overall indication is decreasing momentum because of the breakdown in price movements last Thursday and Friday. This is the level where traders would be looking for a further buy signal above the 50 level, but should a reading at or below the “50” level show, the potential for a Bearish reversal remains.

Comments from last week: 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.

S&P 500 WEEKLY: Outside range

The OPd (outside period down close) has historically marked the highs of price movements.  A large range OPd indicates selling from a new high value. Markets tend to consolidate following this type of bar showing a strong advance in prices. With the Bearish “Wedge” pattern remaining in place, the potential for a follow through lower remains the highest probability outcome this week. 

Indicator: Relative Strength Indicator 14. Bearish divergence

Relative Strength has turned lower as strong price momentum has given way to a reversal. With the reading moving over the 70 level, and turning lower, momentum is changing, with the RSI setting a “lower high point” as the Index posts a new high, the bearish divergence signal is now in place. 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 full bearish RSI signal.

Comments from last week: The S&P500 has again made an extended advance but on a shorter-range low to high. A very strong Primary UP Trend is 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.

SPX DAILY
Price structure: Bearish Reversal

The closer detail in the Daily chart shows price has moved to the lower channel line following the OPd and the bearish divergence signal discussed last week. The “Gap area at 5400 remains the first target in this current decline. The support level of 5266 would be the significant low and offer a “Buy the dip”. The Daily trend remains “UP” and this retracement has the potential to act as a buying opportunity.

Indicator: Relative Strength Indicator 14

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

Comments from last week: 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.

NASDAQ (100) DAILY Price structure: Reversal

With only one day of price consolidation before the “GAP” down to the 20,000 point level. The Gap at this high price area shows a sudden change in sentiment that has followed on with lower prices below the short trendline. The Nasdaq now trades at a 3-week low from the high point, further selling could be expected into the “GAP” area above 19,000 points, with the potential to retest the 18,750 level in the coming weeks.

Indicator: Relative Strength 14:

Last week saw the momentum indicator turned lower to be below the key 50 level. The RSI has a Bearish divergence signal with a movement lower below the 50 level towards the 30 level confirmed, indicating the first slowing of bullish momentum move is now underway, this may provide some early insight to overall Primary trend reversal. Relative strength moving higher above the important 50 level is required before a Bullish momentum signal can be stated.

Comments from last week: 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.

USD Spot GOLD – DAILY: Continuing channel

Gold has now moved back into the developing price channel with $2288.0 as Support and $2431.3 as Resistance. The upper price target remains in place until a trending reversal takes place. Last week’s close at $2400 is a good technical level to give late buyers confidence to hold. Should a further close occur below this level the lower support at $2288 remains the price target.

Indicator: Relative Strength 14: Bullish

The RSI is turning lower, and has closed below the 70 level but remains above the 50 level.  The Relative Strength is a momentum indicator, turning lower at these levels is indicating real price momentum over the current 14 day look back period is declining.  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 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.

SILVER Price structure: Developing Channel

In the past week Silver did not set a new all time high as Gold did, showing the correlation between the metals to be breaking down. Silver shows a new internal resistance level and lower high at $32.50 with current movements testing the $28.80 support. Like Gold, silver is developing into a trading range channel. To remain bullish the current support level at $28.80 should hold with a reversal pattern developing. Traders should monitor this current level for a bullish entry for a retest of the $32.50 level.

Relative Strength 14:

Currently the Relative Strength is moving below the 50 level, indicating price is now playing out into a sell signal. Friday’s close saw the indicator 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 support level. The Primary UP trend remains.

Comments from last week: 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.

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 towards 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.