The XJO is expected to tumble on open this morning following a strong pullback in the U.S overnight. Their futures are flat.
The levels of which our market and some of our banks were trading at seemed unreasonable and unsustainable, and it was our opinion we would wake up to a sharp fall soon. Well, our market is set to open about 100 points lower this morning, just below key support at 8,000.
With flat U.S futures, this could be the extent of the falls. If they remain flat our market could easily stabilise in the morning or afternoon session. We also have GDP numbers at 11:30am (AEST) which could exacerbate or alleviate depending on how the numbers come in. Keep in mind the sentiment both locally and in the U.S remains firmly bullish, and this morning’s open isn’t indicative of panic. This could easily be a flash in the pan and some simple profit taking/ mean reversion.
If 8,000 breaks, then 7,950 and 7,900 remain the key targets, which is also roughly where the 50 day MA comes in. If selling persists in the short-term, the 50 day MA can often act as a point of comfort for our market.
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