The XJO is expected to open lower this morning near 8,680. The U.S had a tumultuous night of trading, balancing strong tech reports against new tariff announcements from Trump. They sold off opening gains to finish in the red, and our market is likely worried that their recent moves are a sign they are about to start a well-earned round of profit taking.
Either way, we clearly don’t have the confidence to break our own consolidating range. Yesterday we retested the top of the trading range, represented as our all-time high key level of resistance at roughly 8,750. However, we stalled, and this morning we should rebound off it, shedding the gains of the past two sessions. Our open puts us back in the middle of the trading range.
The bottom of the range comes in at roughly 8,650, which was also our previous all-time high key level of resistance. There is also an uptrend line that has been in play since roughly the start of May when our market’s uptrend started shallowing out. This uptrend line formed the previous ascending triangle that our market broke out of when we made fresh all-time highs a couple of weeks ago. It, coupled with our new all-time high key level of resistance at roughly 8,750, also forms the current ascending triangle we are trading in. The uptrend line comes in at roughly similar levels as the bottom of the consolidation range, reinforcing that support. In essence, we should expect roughly 8,650 to hold unless the U.S falls out of bed.
We should also continue to expect our market to eventually break the ascending triangle higher, following the uptrend line as it did last time. Though there is a lot going on at the moment, and the market could be driven either way by fundamentals if they compound enough.
US Markets
Both the DOW and SP500 closed lower overnight. Only the NASDAQ managed to close practically flat. Sessions were mixed, with both the DOW and SP500 opening higher, but selling off intraday to finish in the red.
There is a slew of data this week, in both macro-economic terms and earnings reports. This has kept their market volatile. In addition, Trump has added further complication by announcing new tariff threats and letters. Canada outlined a plan to recognise Palestinian statehood, and the U.S in response threatened further tariffs. The U.S is Israel’s largest backer, both politically and monetarily.
Tech was doing well, with both Microsoft and Meta leading opening gains. Apple followed suit, but Amazon disappointed. The strength in tech was not enough to shield the index’s from Trump’s latest announcements. Only two sectors finished in the green: Comm. Services, and Utilities. Industrials finished exactly flat, and the rest were varying degrees in the red. Health Care, Real Estate, and Materials fared the worst.
Technically, the SP500 threw up a bearish engulfing pattern last night. The open and close and day’s trading range engulfs the previous day’s range. It is not a super reliable reversal pattern, but it helps it has happened at the top of the range. Momentum seems to be building to the downside, with the short-term stochastic are widening and pointing firmly lower. Key support comes in at roughly 6,280 – a key level that was their previous all-time high key resistance. We should expect to see their market their soon.
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