The XJO is expected to rally on open this morning, with an expected open near 8,850 at time of writing.
Both our market yesterday, and the U.S last night, have bounced from key support. Yesterday, our market sold down once again, reaching the bottom of its trading range at roughly 8,750 by midday. We then proceeded to bounce from that key level, retaking most of the session’s losses to finish only marginally in the red. This morning, we should extend that bounce into positive territory. The U.S overnight also bounced from a key level that represented their previous all-time high resistance (which is now acting as support). Their futures are flat.
Both our market and the U.S continue to trade in longer-term uptrends. The U.S is also trading in a medium and arguably shorter-term one too. Our market has disconnected, and in contrast, seems to be tracking sidewards in a rough channel in the medium term. Of course, in the short-term, we have seen a swift selldown – though it is not a downtrend as downtrends are categorised by lower peaks and troughs. If the U.S continues higher, we should expect our market to at least hold 8,750 for now.
With our bounce this morning, we should break the countertrend line that had formed since our recent highs. The next key level of resistance is now 8,880, which has proven to be a key level of both resistance and support over the past few months. The 50 day MA comes in just above it at roughly 8,900. It is the next logical target, being a point of comfort and equilibrium for the market.
Please check your trades on open. The market is whipsawing, and there may be good opportunities to close when market opens.
US Markets
US shares jumped overnight with broadbased buying. Though prices weren’t able to finish at the intra-day peak, it was still a solid session. US shares were buoyed by mostly positive private economic data (the government data is not being reported due to the shutdown), with the data showing better than expected job openings and non-manufacturing growth. The intra-day move did stall and reverse somewhat however after JPMorgan CEO Jamie Dimon told Reuters that asset prices are quite high and there is always a risk of markets going down. The US Supreme Court is also currently weighing the legality of Trump’s tariff agenda; legal scholars state that pretty clear that most of the tariffs are illegal, but the Supreme Court has been stacked with Republican ideologues, so there is no guarantee they will rule against the tariffs. Should the tariffs be ruled illegal, it is likely that markets would rise, though markets could become nervous if other nations don’t repeal the tariffs they levied in response to Trump’s tariffs.
Eight of the eleven sector groups of the SP500 closed higher overnight, with Communications and Discretionary the best performers. No sector saw notable selling.
Technically, the SP500 found some support at the previous resistance level at 6,750 and bounced from this level overnight. The index has been on an uptrend and potentially an acsending channel but has been working its way back towards the bottom of the channel. We now need to wait and see if the index holds above 6,750, which would indicate a rise back to the all-time high resistance of 6,900, or if it breaks below this level and falls back to the lower bound of the channel (the uptrend line) which currently sits around 6,700. The stochastic is still pointing lower, confirming a likelihood of downwards movement but that will change if the index can notch another gain tonight.
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