XJO WEEKLY
Price structure: Bullish support

Following the inverted hammer bar 2 weeks ago, further high price rejection saw the Index (market) trade lower below the key 7910 level. However, the close of last week remained above this key level and above 50% of the whole weekly range, high to low. This is a bullish outcome in this longer-term time frame and suggests further movement higher is possible. This week’s key is for the buyers to defend this new 7910 support level on the close of this week.

Indicator: Relative Strength 14 – Bullish

Relative Strength has turned sideways in line with the consolidating price action and remains above the key 50 level due to this breakout movement within the previous 14 bars. 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: 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.

XJO DAILY
Price structure: Bullish retest higher underway

The daily view of the Index shows only one close (Thursday) below the 7910 level at 7860 points. The volume study shows no outstanding volumes above the $1 billion on the retest, suggesting an orderly market movement. The XJO Volumes above 1B indicate strong buying. Last Friday closed above the “midpoint” of Thursday, indicating buyers entering the market and the completion of a bullish a, b, and c pattern. Looking forward, the potential retest of the 8083 level is underway.

Indicator: Relative Strength 14: Bullish

The Relative Strength Indicator (14) has turned lower into the close last Thursday, the overall indication is decreasing momentum because of the breakdown in price movements last Wednesday and Thursday. This is the level where traders would be looking for a further buy signal currently 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: 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.

S&P 500 WEEKLY: Wedge pattern

The “outside range” discussed last week has played out to find support at the developing short trendline. The rising wedge pattern remains in place. A further price movement below the trendline would send a very strong bearish signal for further selling. It is important to observe that the past two weeks of declining Index value cover four weeks of gains. The underlying Primary trend remains UP.

Indicator: Relative Strength Indicator 14. Bearish divergence

Relative Srength 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 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.

SPX DAILY
Price structure: Gap fill

The Daily chart shows the orderly a, b, and  and c price decline into the “Gap” below the 5400 level. The Inside period (IPu) set on Friday shows the market again in balance. This is a great technical setup for further gains, but only on a Daily close above the IPu. Price failure at this level sets the 5266 level as the primary downside target.

Indicator: Relative Strength Indicator 14

Relative Strength Indicator has moved below the 50 level and turned higher last Friday, traders should consider a further close over the 50 level as a bullish signal. However, 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 higher towards the key 50 level would be a Bullish signal that should not be ignored.

Comments from last week: 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 can act as a buying opportunity.

NASDAQ (100) DAILY Price structure: a, b, and c to the Gap fill

As with the S&P500 the Nasdaq (100) has closed the price Gap (18,722) during a Bullish a,b,c type decline. It should be noted 2 “Gaps have been left open during the decline that may be resolved at some point in the future. The Inside Period up close (IPu) set last Friday shows the market in balance at this level. The “Gap” showing at 19,500 points should be monitored for a retest of this level, a close over this level set the 20,000 point level as the retest target.

Indicator: Relative Strength 14

Last week, the momentum indicator turn lower to 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 the Bullish momentum move is now underway. This may provide some early insight into the 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: 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.

USD Spot GOLD – DAILY: Continuing channel

As with the Indices, Gold set an a,b,c pattern lower to set an Inside period last Friday showing the market in balance. The $2393.0 level is now the resistance level for the Yellow metal to reclaim with a solid close towards $2400.0 to remain Bullish. No trend is in place in this 4 month consolidation period. Should price rejection occur below the $2400.0 level key channel support at $2288.0 remains the down side target.

Indicator: Relative Strength 14: Bullish

The RSI is turning lower, and has moved below the 50 level but turned higher above the 50 level on the close of the week.  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 moving from consolidation 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 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.

SILVER Price structure: Continuing Channel

The failure of the price to hold the key $28.80 level puts the metal into a Primary downtrend. As with Gold, the inside range set last Friday shows the market in balance. Traders should look for a close over the $28.80 level to remain Bullish in the short term. Without a closing price over the high of the Inside period, the Trend remains bearish, with $27.00 as the next support.

Relative Strength 14:

Currently the Relative Strength is moving below the 50 level towards the 30 level, indicating 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 has ended into consolidation.

Comments from last week: 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.

AUSTRALIAN VOLATILITY INDEX: The equities traders compass.

The current volatility closing value has moved to close above the 11 value following a further move higher towards the key 13 level. Current closing value indicates the XVI remains within the “Bullish for Equities” level. 

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

For continued support of equities, the XVI should remain subdued below the “13” level.

The cost of 3 month 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.