The XJO is expected to edge higher on open this morning. The U.S was up strongly overnight however we have already priced in much of their gains which had been heralded by their futures during our session yesterday. U.S futures are flat this morning.
Both markets have broken cleanly higher, closing in fresh all-time highs. Our futures this morning indicates a mild open, and U.S futures aren’t giving much indication as to how their market will trade from here. Of course, things may change through the day.
Our market is particularly expensive – probably the most expensive it has ever been. We cannot provide any good reason as to why our market continues to move higher except for our market’s obvious modus operandi of simply following the U.S. However, it’s curious as our market seems to be willingly anticipating the positive moves from the U.S – rather than following them cynically as we typically would.
There is not clear resistance in sight, but our market likes to typically stick to 50 point increments. 8,200 and 8,250 are therefore likely targets. We should flirt with 8,200 today. 8,150 and 8,100 are the next key levels of support.
Technically, our market looks overbought in the immediate term. We are riding the top of the Bollinger bands and the short-term stochastic are well in the overbought area. We have also had a decent rally without any meaningful pullbacks. However, from a less immediate term but still short-term perspective, the market can justify further gains. We may see a dip, but we should expect 8,100 or thereabouts to hold and for the market to continue higher – provided the U.S does too.
We remain cautiously bullish to sidewards. Technically there is no reason to see this market pull back excessively, but fundamentally there is. It seems one day we are likely to wake up to a crash.
US Markets
Eight of the eleven sector groups of the SP500 closed higher overnight, with Technology the strongest performer, followed by Discretionary, and Communications stocks. Staples and Utilities were the worst performers.
Technically, the SP500 has broken above the all-time high resistance at roughly 5,650. This should see it continue higher, though where it may head to is anyone’s guess. Should the index fall from here, the previous resistance at 5,650 is the first downside level to watch.
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