The XJO is expected to open practically flat this morning despite a continued move into fresh all-time highs in the U.S overnight. U.S futures are flat.
Yesterday we opened firmly in the green, but by the close, had shed roughly half the intraday gains. We managed to retake Friday’s losses, but it is clear our market is indecisive about what to do next.
The U.S has made two days of fresh consecutive highs, and our market has responded with cynicism and sidewards movement. The channel remains between roughly 8,600 all-time high key resistance, and roughly 8,450 to 8,500 key support. Indeed, it seems we bounced off 8,500 yesterday.
We may not believe the U.S can hold ground, and that they are likely setting themselves up for some profit taking. This level of cynicism is typical for our market. We have just been uncharacteristically optimistic for the past few months. Perhaps we are now regressing.
The shift may be driven by the fact we are trading near our all-time highs, whilst looking at the gathering storms on the horizon. Furthermore, at some point it is too hard to justify CBA’s share price and some profit taking was overdue.
For now, we should continue to expect the market to track sideward in the range until volatility returns to the U.S.
US Markets
US shares closed higher again overnight, with each of the three major indices seeing notable gains. Its hard to ascribe a reason to the gains, though it does look like Trump’s ‘Big, Beautiful (Budget) Bill’ is getting close to passing. The bill will provide tax cuts to the wealthy, and so could lead to further funds flows into share markets. US economic data was fairly poor again overnight, with the Chicago PMI coming in much lower than expected. Tonight we will see some more PMI data, which could be important for the market, but the main events this week will occur on Wednesday night with a speech from Fed Chair Powell, followed by US unemployment data on Thursday night. The US economy is definitely slowing and the market is hoping for interest rate cuts, but at the same time, inflation is remaining elevated and that could cause the FED to wait on the rate cuts.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Technology, Financials, and Real Estate the best performers. Energy and Discretionary stocks saw the most selling.
Technically, the SP500 has now pushed through the previous all time high resistance at 6,150. With this level breaking, we would expect further upside, though prices are elevated and gains may be smaller from here. 6,150 is now the potential support to watch to the downside.
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