The XJO is expected to edge higher this morning, with an expected open near 8,700 at time of writing. The U.S had another mixed night of trading which saw their market shed intraday gains to finish only marginally in the green. Their futures have also started moving into the green.
Yesterday we ended up selling off over half of Friday’s gains. This is fairly typical of our market, where after seeing a clean break into fresh all-time highs, will sell down almost immediately. It is very rare to see fresh consecutive highs.
The pullback yesterday makes 8,750 the next key level of resistance, and of course, roughly 8,630 – the previous all-time high, is now the key level of support. Our positive move today would suggest that we could test 8,750 again soon, however we would likely need to see the U.S commit to gains. Their market looks tired and indecisive, and though we have been reinvigorated recently, it would be hard to suggest that we will continue to make strides without them doing so too.
For now, we should continue to expect our market to track sidewards to higher. Don’t be surprised if we consolidate here for a moment before dog-legging up again at some point.
Today we have the minutes from the recent RBA meeting. The market had mostly priced in a rate cut for July, but the RBA disappointed. The market barely flinched as the pause just entrenched the idea of a cut coming six weeks later in August. If the minutes today point to anything alarming the market may be spooked, but otherwise it seems likely to be a non-event.
US Markets
US shares edged higher on average overnight, with the SP500 and NASDAQ closing a little higher, while the DOW JONES closed lower. Prices initially traded firmly higher but they pulled back to the close to finish fairly flat. There was a lack of major news or events to drive US market movements, and intead prices continued to grind higher with the current bullish momentum. Tonight, Fed Chair Powell will speak and that will be somewhat important for market movement in the short-term. Otherwise, the other notable event for this week is US company earnings, which has so far been fairly positive. Expect a continued grind sideways to higher from here unless an unexpected negative event occurs.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Communications and Discretionary the best performers. Energy and Healthcare saw the most selling.
Technically, the SP500 closed just beyond the all-time high resistance at 6,300. This could indicate further upwards movement, though it certainly wasn’t a clear break of this level. Should the index rise tonight however, that would suggest the gains will continue. The previous resistance at 6,150 which may now act as support.
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