We are expected to edge lower on open this morning following a small pullback in the U.S overnight. Their futures are flat.
Our muted open is our market simply cooling after stronger than expected bullish day yesterday. Enough was enough, our market had sold off further than the U.S as a whole, and dipped below the 50 day MA. We had five days in a row of bearish movement, which has only happened a handful of times in the past couple of years. We were due for mean reversion.
We managed to break through 8,300 resistance, and to stick our head back above the 50 day MA – a point of comfort for our market in the shorter-term. This morning, we are set to pullback slightly and retest 8,300.
Our rebound yesterday was also a bounce from the underlying uptrend line.
From here, it would not be surprising to see further gradual gains, with a dose of sideward movement as we head into a quiet period. Though volumes may be lighter, keep in mind that markets can still easily move. Don’t be surprised to see our market trading back near our highs before the year closes out.
Of course, it will come down to the U.S. There is plenty of reporting this week, and a U.S interest rate decision. If they continue to see goldilocks readings, then there is a good chance their market closes the year with fresh highs. We will have to wait and see.
US Markets
US shares closed lower with each of the three major indices finishing in the red. This is the longest streak of consective losses for the DOW JONES for 50 years, with nonstop selling for 8 days straight, and with red closes for 10 of the last 11 sessions. US shares closed lower after some mixed economic data, with stronger than expected retail sales, which perhaps points to continued strong consumption and could be inflationary, while industrial production was lower than expected. Tonight we will see the Federal Reserve meeting and the Fed is expected to cut interest rates, but also to suggest that further cuts from here will be much slower. On Friday night we will see inflation data, which will also influence the interest rate narrative. Regardless, US shares are definitely expensive up here, so some profit taking shouldnt be unexpected.
Ten of the eleven sector groups of the SP500 closed lower overnight, with Industrials the weakest performers, followed by Energy and Financials stocks. Most other sectors closed lower to some degree, with only Discretionary managing a (small) gain.
Techically, the SP500 is grinding along below the resistance at 6,100. Given the stall here, it is likely we could see the index move back towards 6,000. However, given the overall longer-term uptrend, we would then expect an eventual break higher.
Want to continue reading?
This is only an excerpt from todays TradersCircle Members Morning Market Update and doesn’t include the key data and charts our traders are keeping an eye on every day. Become a member today for this plus full length mid-day and end of day updates, trade recommendations, trade group webcasts, and much more!