The XJO is expected to edge higher on open this morning, following an indecisive U.S session overnight which saw their market finish slightly higher also. Their futures have moved into the green.
Yesterday we opened near 8,450, an intraday resistance level which represents our all-time highs. Our market flirted with the resistance for much the session, but by the close we had rebounded off it intraday to give up more than half of the opening gains. Even though the bulls control our market, we clearly don’t want to get too ahead of ourselves.
The U.S held their all-time high resistance level overnight, just as we did yesterday. Our market in response will retest 8,450 this morning but unless U.S futures properly herald a break tonight, we are unlikely to push through today.
There is also an accelerated uptrend line which comes in at roughly 8,375, which also roughly represents the previous all-time high resistance (now support). If we do see a pullback, this is the first reasonable target. Finally, with the uptrend line and key level of resistance at 8,450 working against each other, our market seems to be tracking towards the point of an ascending triangle. Typically, we would expect the underlying uptrend line to win, and for the resistance to break, however considering the steep gradient of the uptrend it wouldn’t be surprising to see our market shallow out. If this were the case, then roughly 8,250 to 8,300 are the next reasonable targets.
Either way, we will wait and see which way our market breaks, but the momentum is clearly bullish.
US Markets
US shares closed higher overnight, with each of the three major indices rising. However, gains in the NASDAQ and SP500 were fairly muted, and prices were unable to hold at the highs of the session, with late selling bringing things back towards opening levels. There was a lack of major US economic news or events overnight, and instead prices drifted higher with last week’s momentum and perhaps with optimism after a Japanese stimulus announcement. This week will be a big one for data however, with the Federal Reserve meeting minutes tonight and with GDP and PCE price data (inflation data) tomorrow night. The current upwards movement could be disrupted by sticky inflation and interest rate cuts looking less likely so keep a close eye on these data points. US markets will be closed later in the week for Thanksgiving.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Real Estate, Discretionary, and Materials stocks the strongest performers. Energy stocks saw the most selling, followed by Utilities.
Techically, the SP500 reached the potential resistance level at 6,000 points overnight. This level held and the index bounced down from this level, suggesting that it has held as resistance. This level would have to break for further gains to look likely. Should the index bounce down from here, the recent lows around 5,880 are likely to act as support.
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