The XJO is expected to edge higher on open this morning near 8,975. This follows a continued move higher in the U.S which saw their market return to their all-time high resistance. U.S futures are flat.
Yesterday we smashed through 8,900 resistance on open, and continued higher through much of the session. By close however we pulled back inside the Bollinger bands. This morning we are set to retest yesterday’s highs.
We have accelerated aggressively once again off the uptrend line, and so it would be reasonable to expect some selling soon. We may indeed extend the run, with 9,000 looking like a reasonable target. However, it would be hard to expect our market to have a straight run back to our all-time highs at roughly 9,100 without some profit taking first.
We have CPI numbers today, which our market will want to see ease. With stronger employment data last week, our market will likely struggle to hold strength if CPI also comes in strong as it will entrench the belief that rate cuts have come to an end. It will also add some credence to the rumors that we could be heading to rate rises this year.
Tonight, we also have the U.S Fed, and with the U.S trading at all-time high resistance, seems likely to decide whether they break through and continue higher or not. Although, momentum seems to have returned to both markets, and we could keep dancing even if the music has indeed been turned off.
8,900 is now support, and beyond that, 8,850 to 8,800. The latter seem like more reasonable targets as they are also where the uptrend line comes in.
US Markets
US shares were mostly higher overnight, with the SP500 and NASDAQ finishing in the green, while the DOW JONES finished firmly lower as United Health, America’s largest health insurer, reported poor results and dropped around 20 percent.
The major events for US markets this week are yet to happen. Apple, Meta, Microsoft and Tesla are slated to report quarterly results later this week, and investors will use these reports to guage the effectiveness of AI spending. The are concerns over high valuations in tech, so even small misses could trigger a massive revaluation of the AI trade. We will also get an update from the FED on Wednesday night, though no rate cut is expected. Instead investors will look for clues as to when the next rate move will come.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Technology, Utilities, Energy, and Discretionary the best perfomers. Healthcare and Financials were the worst performers.
Technically, with the recent strength the SP500 has pushed back towards the all-time high resistance, though it remains slightly below this level (roughly 6,990). The index looks likely to rise to that resistance in the coming sessions, but we will need to wait to see if the market can break above 7,000 points before further gains will look likely. Should the index hold this level as resistance, that could be a sign we will see a move to the 6,750 support level.
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