The XJO is expected to edge lower on open this morning near 8,915 at time of writing. This follows another night of indecisive and whipsaw movement from the U.S which saw their market finish in the red. They seem to be holding both key levels of support and their underlying uptrend, unwilling to break from the sidewards holding pattern for now. Furthermore, their futures have moved into the green.
It’s a confusing market. Yesterday, we reversed opening losses to drive higher in the afternoon session. We finished almost violently in the green after smashing through 8,900 key resistance. With the U.S so indecisive, our market is set to pause today – though who knows, with the rebound in the miners and key commodities, perhaps we will move to the next logical target of 8,975 resistance.
It’s likely fair to suggest that our market’s move on Monday was a false break, and that we had indeed reacted to the uptrend line. We continue to trade in an ascending channel, and we can only continue to assume that our market will trend this way until we see otherwise.
One would have thought that a rise in interest rates, with potentially more on the books, would be bearish for our market, but clearly, we are compartmentalising for now, and will revisit that trauma later. The U.S is showing buying support, even on the sessions they try to selldown, and until they move lower, it seems our market is happy to continue pumping.
US Markets
US shares were mixed overnight, with the DOW JONES closing higher, while the SP500 and the NASDAQ finished lower. It was again worries around the AI space that dented the technology stocks, with Google trading lower ahead of its earnings report. It reported at the close, and was a little higher after market, but not enough so far to retake its losses. Still, US markets remain fairly positive, if unable to break into fresh highs. We have to assume that those fresh highs will eventually be seen in the absense of any news, as the bullish momentum should continue to drag prices higher.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Energy and Materials stocks the best performers. Technology and Communications stocks saw the most selling.
Technically, the SP500 has been testing its all-time high but has been unable to go further. It has recently stalled around the all-time high resistance at 7,000 multiple times before falling back off to the 50-day moving average and potential short-term uptrend line. This leaves the index inside and ascending triangle pattern between that short-term uptrend line and below the all-time high resistance. We would need to break either the short-term uptrend or the all-time high resistance before another directional move will look likely.
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