The XJO is expected to edge higher on open this morning, near 8,980 at time of writing. This follows another mixed night of trading in the U.S overnight, which saw their market finish marginally in the green. Their market at least showed they are willing to hold the bottom of the recent channel after bouncing from it intraday. Their futures are flat.
Volatility has calmed down for our market over the past couple of sessions, as we pause and take a breather. The past couple of sessions have seen our market pullback into the close, unwilling to commit. The U.S being closed Monday night likely contributed to our breather. Now that they have shown they are still willing to hold the channel and bounce, we could see our opening gains extend or at least hold.
We are still in no man’s land, with the most recent level of resistance at roughly our all-time highs at roughly 9,100, and our most recent level of support at roughly 8,750. The past couple of days has also shows we are willing to hold 8,900 and 8,975, but a return of volatility would have us blow past these levels.
US Markets
US shares closed flat overnight, with prices initially trading lower before recovering to finish slightly in the green. After initially struggling in the early stages of trading, technology shares rebounded from earlier lows and financial stocks also provided support. This week, the personal consumption expenditure report – the U.S. Federal Reserve’s preferred inflation gauge – will be the most important economic report as it could impact the central bank’s rate-cut trajectory. The results will be announced Friday night Australian time. Traders are now pricing in a chance of roughly 63% for a rate cut of at least 25 basis points at the Fed’s June meeting, the first with odds above 50%.
Four of the eleven sector groups of the SP500 closed higher overnight, with Real Estate and Financials the best performers. Materials, Energy, and Staples saw the most selling.
Technically, the SP500 test and held the support level at 6,800 despite initially trading below this level. With the index now potentially forming a channel between this support and the all-time high at 7,000. With Friday’s inflation news, one might expect a run back to the all-time high at 7,000. However, we are yet to recieve the bullish entry signal suggesting this. The stochastic is also pointing down still, though it will likely turn higher should we get that bullish entry bar. However, should the index break below 6,800, we should see a period of selling.
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