The XJO is expected to rally on open once again this morning despite a flat night in the U.S. Their futures are flat.
We closed at our highest ever level yesterday, and this morning we will extend that with an expected open just above 8,150. Historically, our market has been sceptical of continued rallies in the U.S, and sceptical of them breaking higher – especially into fresh highs. This scepticism has been expressed by our market either not pricing in their gains, holding key resistance, or even sometimes pulling back. This is not what we are seeing. Our market has uncharacteristically pushed into fresh highs whilst the U.S has stalled at key resistance. Rather than our typical scepticism, our market is anticipating a break from the U.S and leading the charge – very unusual indeed.
8,150 is a key intraday resistance our market has bounced from twice now. We will test it on open. Though the discerning man may suggest that we are likely to hold this level considering the U.S still has not broken higher, things are stronger than what would typically make sense. We should assume the bullishness whilst the music is still playing, but be prepared for the hang over once it stops.
US Markets
US shares were somewhat mixed overnight, with the SP500 recording its sixth consecutive higher close as it finished very slightly in the positive. The DOW JONES also finished in the green, while the NASDAQ closed lower. Shares are roughly treading water just below resistance as we head into perhaps the most awaited event of the year, with the US Federal Reserve expected to cut interest rates this week – the first US rate cut since 2020. Markets have enjoyed perhaps their most bullish time in history in the lead-up to this event, so it will be interesting to see what happens afterwards. The debate now is whether the Fed starts by cutting 0.5% or goes with the 0.25% cut. Recent economic data has been weak but inflation has been somwehat sticky, so its up to the Fed as to whether they risk a rebound in inflation to try and achieve a soft landing. The Fed decision will come tomorrow night, but ahead of that, we will have US retail sales numbers announced tonight, and we would expect to see market movement based on that event as well.
Nine of the eleven sector groups of the SP500 closed in the green overnight, with Financials, Energy, and Materials stocks the strongest performers. Technology stocks saw the most selling.
Technically, the SP500 has continued up to the all-time high resistance at roughly 5,650. We will need to see what happens at this level, whether we see a hold of resistance and a break lower, or whether we see a break through this level and further gains.
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