The XJO is expected to rally on open this morning. The U.S had another mixed night of trading in which their market retook intraday losses to finish in the green. The intraday reversal is likely being interpreted by our market as the U.S shedding their recent CPI reading and getting ready to break higher.
Our response is fairly strong. We should open near 8,620, practically reversing yesterday’s losses. Our open will retest the all-time high resistance once again – a level we have crashed up against on many occasions over the past few weeks. The rally today will also reaffirm the short-term uptrend line that forms the ascending triangle pattern alongside the all-time high resistance. It is clear that the strong bullish undercurrent remains persistent.
It seems unlikely that our market breaches all-time high resistance today. We will likely need to see the U.S do so first. Their futures are mildly in the red, but if they turn around during our session and herald a break tonight, perhaps our market will peak through. Otherwise, we should expect to hold.
We continue to assume the market will track sidewards to higher in the medium term. In the short-term it feels like we may break higher soon. Of course, it is hard to suggest when and we will need to wait and see.
US Markets
US shares closed higher overnight, with each of the three major indices finishing in the green. US markets initially opened firmly lower, but late buying pushed them to finish higher. US markets also retraced the selling of the prior session, as Trump told reporters he had no plans to replace Fed Chair Jerome Powell. US shares were perhaps boosted by a report that showed that producer prices weren’t rising (unlike consumer prices), which may have helped stave off some inflation worries. Additionally, US industrial production was also stronger than expected in June. US retail sales will be reported tonight, and that could move the market, but otherwise, the rest of the week is pretty clear for major scheduled events. Don’t be surprised to see some sideways movement from here.
Eight of the eleven sector groups of the SP500 closed higher overnight, with Healthcare, Real Estate, and Financials the best performers. Energy shares saw the most selling.
Technically, the SP500 recently found some resistance around 6,300 and it has held below this level for the past week. 6,300 would have to break for further gains to look likely. The previous resistance at 6,150 which may now act as support.
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