The XJO is expected to rally on open this morning, with an expected open just above 8,600.
Strength returned to the U.S overnight, rallying back to their all-time high key resistance. Our market has been practically waiting to see the U.S at least not fall to justify pushing into fresh highs. We have given it a good crack, but have been unable to make any real ground with he U.S tracking sideward, with fears that a fall could tip us over our elevated levels. Yesterday for example, our market gave up all our intraday gains into new territory to finish flat. Now, with the U.S decisively moving higher and holding their gains into the close, our market will break free of the bonds of uncertainty.
These things tend to be short-lived however. Whenever our market truly breaks into fresh highs, a pullback is often right around the corner. It often happens immediately, or after a few days of consolidation. It is rare for our market to just continue making consecutive gains into new territory – but it can happen.
Our strength is likely on the back, at least in part, due to the expected interest rate cut next week. We will finally be joining the rest of the western world. We have been outside in the cold, looking in for a while and a collective sigh of relief is likely to be heard across the nation. Outside the raw drug that is the promise of rate cuts, its hard to know what exactly our market is optimistic about.
Regardless, we are here. 8,600 and 8,650 are likely to be key targets for our market today. Our index seems to like 50 point increments. Don’t be surprised if most of the rally happens on open, and we give up some of the gains into the close.
US Markets
US shares closed firmly higher overnight with President Trump announcing that he would delay reciprocal tariffs until April. US shares returned to their all-time highs overnight with the tariff news. Once again the move shows how bullish the market is, with the market not falling when the tariffs were announced, but now jumping strongly on their delay. Overnight US economic data also showed a jump in producer price inflation, though there were also fewer jobless claims that expected. Tonight we will see US retail sales, which are expected to start slowing. Regardless, the strength of markets at the moment is unbelievable.
Technically, the SP500 has returned to the all-time high resistance level which sits just above 6,100. We will need to wait and see if this level holds or breaks. Should we see a break above this level, we should see further gains, though its hard to say where the target would be. To the downside, there is key support at roughly 6,000 points, which is also close to where the uptrend line comes in. This leaves the SP500 inside an ascending triangle, waiting for a directional breakout.
All eleven sectors of the SP500 closed higher overnight, with Materials the strongest performers, Discretionary was the next strongest performer, followed by Technology. Most other sectors also saw reasaonable buying.
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