The XJO is expected to open flat this morning.
The U.S closed lower overnight, breaking keys support and finishing near their next key level. However, our market seems to be running its own race for the moment, and it seems reasonable to suggest that in our recent selldown we have somewhat already priced in their move. In comparison, the U.S is trading almost one per cent above their 50 day MA, where as our market is trading almost one per cent below ours. U.S futures are also flat, indicating that last night’s selling is at least not compounding at this stage.
Yesterday we tried to continue the bounce from key support at roughly 8,750 that we saw intraday on Wednesday. However, the move yesterday was rather meek and unfulfilling. We shed intraday gains to finish only marginally in the green, pointing to a market that though is willing to hold the trading range (for now), is not in the mood to commit to much more.We continue to trade around the 50 day MA, a point of equilibrium and therefore comfort for our market whilst it weighs everything up.
With interest rate cuts no longer around the corner, the market has little to be hopeful for. Though, money is cheap, asset inflation continues, and money keeps flowing into Super with an economy that remains close to full employment. Money supply remains relatively “abundant” – though of course also remains a confidence game. We could easily see markets continue to push for the sake of pushing, or buckle under the weight of its own stretched valuations. For now, we can only assume the trends will hold, and that markets will eventually continue higher. Of course, one day that will not be case, but until we see otherwise, we can only continue assuming the trend will hold.
Our market does love to track sideward, and so Condors, Bull Puts, and Bear Calls may be the way to go. 8,750 is the key level of support for our market. 8,880 remains key resistance and roughly where the 50 day MA comes in. If that breaks, then 8,950 and 9,000 are the next key levels, but it doesn’t seem likely we get there soon. For now, we assume the market will continue to hang around here and hold these levels.
US Markets
US shares fell strongly overnight with selling across the three major indices. The selling came after a private sector jobs report provided yet more evidence of a weakening labour market; Challenger, Gray & Christmas reported that corporations announced a 183.1% monthly surge in layoffs, the worst October in over two decades. While this is obviously negative, it does also increase the chance of a December rate cut from the FED, which the market would love. Still, prices are EXTREMELY elevated, so any sign of economic uncertainty can always trigger selling. Also concerning investors is the ongoing US government shutdown, now the longest in history, which is starting to cause economic and societal damage, and which means that no government economic data is being reported (increasing uncertainty).
Only two of the eleven sector groups of the SP500 closed higher overnight, which were Energy and Healthcare. Discretionary and Technology saw strong selling.
Technically, the SP500 broke below the potential support at 6,750 overnight, continuing lower to a potential uptrend line.. The index has been on an uptrend and potentially an acsending channel but has worked its way back to the bottom of the channel. We now need to wait and see if the index bounces from the trend line and closes 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. The stochastic is still pointing lower, confirming a likelihood of downwards movement but could change with a bounce from the trend. Should the index break below the trend line, we could see a drop back to the next support at 6,550.
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