The XJO is expected to rally again on open this morning as the U.S extended their gains overnight. Their futures are flat.
Yesterday we managed to continue pushing higher through our sessions to be within arms reach of our all-time high key resistance at roughly 8,100. This morning, we will test it and potentially break through.
Typically, it would be an almost laughable idea that our market would make fresh all-time highs without the U.S doing so first. However, we have been clearly willing to price in gains without much lead from them lately, and so we shouldn’t be too surprised if we close in record highs today. It does still seem more likely that we close having flirted with the key resistance.
US Markets
US shares closed higher for a fourth-straight session after initially trading lower. Technology was again the driver of the move, though all sectors saw some degree of gains. US economic data overnight was mixed, with a bigger than expected rise in jobless claims, which could add to recession fears, yet producer prices fell by more than expected, supporting the case for rate cuts. US markets will see a rate cut next week at the Fed’s September meeting, and recent data suggests that it will be a 0.25% cut. US data recently has not been good and it is surprising their market has bounced on the back of it. The jobs market has been weaker than expected, yet inflation is perhaps remaining stickier than expected, despite this, it seems markets are happy to go with the upwards flow for now. However, a word of caution – prices are extremely expensive up at the current levels, they rely not only on rates being cut here, but also on expected strong earnings growth from here.
All sector groups of the SP500 closed higher overnight, with Communications, Discretionary, and Energy stocks the strongest performers. The other sectors all saw relatively modest gains.
Technically, the SP500 continued to rally after recently bouncing from support. The index now looks bullish to the all-time high resistance at roughly 5,650. We will need to see what happens at this level should the index reach it.
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