The XJO is expected to open flat this morning. The U.S was closed overnight, but their futures have sold off marginally.
We continue to grind along key support, somewhere around 8,500 to 8,550, waiting for who knows what. It feels like our market wants to rise but can’t do so with negative sentiment building up in the back of markets’ minds.
The ascending channel we have been trading in since roughly the start of the May has broken, but it did so with a whimper, not a bang. This doesn’t translate to an expectation of bearish movement. Indeed, we should continue to assume the market will track sideward to higher from a technical analysis perspective.
Of course, fundamentally, there is plenty of reasons for why markets should be selling off, but that isn’t new. The market has largely had blinders on, likely only focusing on the prospect of more rate cuts. However, pressure seems to be building, and it seems likely that one day we wake up to a strong sell off. Until then though, there is little choice but to be cautious and continue to trade the technicals.
US Markets
US shares were closed overnight for the Juneteenth Public holiday. US futures did close marginally lower, though they have mostly bounced back this morning after Trump stated he would wait two weeks until deciding whether to join Israel in strikes against Iran. The market is assuming this means that the US won’t get involved, which is a positive. The most relevant recent news remains Wednesday night’s Federal Reserve meeting for June. The FED left rates unchanged, which was expected, so instead investors are trying to digest the accompanying words and statements from the event. The FED cut their outlook for the US economy, suggesting that Donald Trump’s tariffs bring risks of a slowing economy. At the same time, they warned the tariffs could also lead to higher inflation and so members were split in their forecasts of whether there would be further rate cuts this year. Overall this is probably one of the worst outcomes of the meeting for share prices, but for now, US futures are holding up relatively ok.
Technically, despite the recent selling the SP500 has held above the previous resistance levels at roughly 5,975, which acted as support. This level would have to break for further selling to look likely. The index has now arguably broke its uptrend line but assuming this support holds, we would expect an eventual bounce with an upside target at the all-time high at roughly 6,120.