The XJO is expected to rally on open this morning. The U.S managed to retake the previous session’s losses and close in fresh all-time highs once again (albeit marginally).
Yesterday we rebounded intraday from what was likely a short-term accelerated uptrend line that has been in play since our recent lows. The uptrend line will likely be confirmed as our market follows through with the bounce, with an expected open just under 9,000 resistance this morning.
It seems we will take another shot at all-time high resistance at roughly 9,050, which we practically failed at on Monday. If the U.S holds strength, there is a good chance we push through and follow into fresh all-time highs. We need to get there first, but our market looks on trend.
With the U.S government closed, the market cant’ receive bad news in the way of macroeconomic data – which seems positive for now. It’s the equivalent of the market sticking its fingers in its ears and saying “lalala interest rate cuts incoming” in a raspy singsong. And it leads to all-time highs.
Tonight however, Powell will speak, and the market will have access to the minutes from the last Fed meeting – the pivotal one which indicated rate cuts and spurred on the market. It seems likely to be a non-event, but could shift markets either way.
US Markets
US shares closed mostly higher overnight, with tech and growth stocks leading the charge yet again. Investors have been without most U.S. economic data as the US government remains shut down. Overnight we did see the release of the Federal Reserve meeting minutes, which showed a divided committee, in which some members were concerned about rising unemployment but with others remaining wary of inflation. Still, the FED is expected by the market to cut again at the end of the month. That view could be disrupted by Fed Chair Jerome Powell, who will speak tonight. We are also about to enter a US company earnings reporting season, which begins in earnest tonight as well. With prices at record highs, it will need to be a great season for strong further gains to come in the short term.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Technology, Industrials, and Utilities the best performers. Energy and Financials stocks saw the most selling.
Technically, the SP500 pushed back up overnight, bouncing from its uptrend line and returning to the highs of the past week. The index has been on a strong short-term and long-term uptrend and had a strongly bullish week last week that saw the index break above several potential resistance levels. Despite the overnight gains, the index didn’t really close beyond the levels of the prior four sessions however, and so has not shown a typical bullish candlestick. Instead it has stalled out at roughly 6,750, which may prove to be a bit of a resistance level. The index remains on an uptrend, so we would assume this level would break. The index would have to break back below 6,700 for selling to look likely. The stochastic is also looking toppy up here.
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