The XJO is expected to edge higher on open this morning following a decent rebound in the U.S overnight. Their futures are flat.
Yesterday we had a meek bounce from the uptrend line, where we opened higher but gave up most of the intraday gains to finish practically flat. Both our market and the U.S continue to track sideward at the top of the range in a fairly tight consolidation pattern.
We continue to flirt with all-time high resistance, and it seems reasonable to suggest that we won’t break through without the U.S breaking their own consolidation range first. It seems markets are looking for a catalyst, and perhaps it will come Wednesday night during the Fed meeting.
We should open near 8,560, and shouldn’t expect much more today. Unless U.S futures during our session herald a break tonight, it would be hard to expect anything other than a lacklustre day of continued sidewards movement.
US Markets
US shares recovered from their Friday selling overnight, with the situation between Israel and Iran looking likely to moderate from here. Markets are also looking extremely overpriced, but these short-term disturbances could actually work to keep them higher for longer, as markets will likely rebound as the short-term issues are resolves, while their attention is focused away from the longer-term issues; Declining growth, rising unemployment, rising inflation, and lower likelihood of rate cuts. The major event this week will occur on Wednesday night, with the US Federal Reserve meeting for June. The “FED” is expected to keep interest rates unchanged, so instead the market will be looking for changes to the expected rate cuts this year. The previous FED rate cut projection (dot-plot) still showed two additional rate cuts in 2025, and if that remains the case at this meeting, markets would likely react positively.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Communications and Technology the best performers. Utilities and Healthcare saw the most selling.
Technically, the SP500 arguably broke its uptrend line on Friday, and fell to the previous resistance levels at roughly 5,975, which acted as support. This support level would have to break for further selling to look likely. Assuming this support holds, we would expect an eventual bounce with an upside target at the all-time high at roughly 6,120.
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