The XJO is expected to rally on open this morning following a firm rebound in the U.S overnight. Their futures have edged into the red.
The U.S must of liked the CPI reading as they rebounded back to their previous all-time high resistance. Their positivity will help us reverse all of yesterday’s losses, with an expected open near 8,400.
Yesterday we tested key support at 8,350 and with today’s open, show a clear bounce from it. We have now formed an adequate base to continue rallying from if the U.S decides to break through and make fresh highs.
There is clear resistance roughly every 50 points from here to our all-time high at roughly 8,500. It would be hard to expect hard and fast gains, and so we maintain a position of bullish to sidewards to close out the year.
US Markets
US shares closed mostly higher overnight, with the SP500 and NASDAQ finishing in the green, while the DOW JONES finished slightly lower. The rise almost entirely from the Technology and Communications sectors once again, with seemingly only the very large mega-cap shares pulling markets higher. They rose after US CPI for November came in exactly inline with forecasts, neither too strong, nor too weak. The market has interpreted this to mean that there will be a Fed rate rise next week, although most are now expecting the cuts to slow from here, given that inflation hasnt fallen for several months. US shares are extremely expensive and it seems like only a handful of shares are continuing to push things higher. Given this is the case, don’t be surprised to see some profit taking around current levels.
Five of the eleven sector groups of the SP500 closed higher overnight. Communications, Discretionary, and Technology were again the strongest performers. Healthcare stocks saw the most selling, followed by Staples stocks.
Techically, the SP500 rose back towards resistance at 6,100 overnight, though it was unable to push beyond that level. 6,100 would have to break for further gains to look likely. Should the index fall from here, we are likely to see a pullback towards 6,000 index points.
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