The XJO is expected to open flat this morning. The U.S managed to retake intraday losses overnight, after bouncing off key support to finish practically flat. Their futures are also flat.
Yesterday we rebounded off the previous all-time high resistance level which comes in at roughly 8,350. The past 48 hours are likely to have given some participants whiplash, so it wouldn’t be surprising to see a subdued market for a while, especially considering there isn’t much in the way of news for the rest of the week either.
With the holding of the key resistance, our market is arguably trading in an ascending triangle. Regardless of whether a sufficient trend line can be drawn in, there is no doubt our market is still trading in a longer-term uptrend. We should expect this trend to win, and assume the key resistance will break. When it will break is hard to know, however.
Our financials remain at ridiculous levels, being more expensive than they have ever been. The miners remain wary, waiting to see if iron ore can maintain its optimism from the past few sessions. The miners look cheap here, and the banks look ready for profit taking. Don’t be surprised to see a rotation of capital from the financials into the materials if the market wants to continue to remain range bound for now.
US Markets
US shares closed mixed overnight, with the DOW JONES closing higher, while the SP500 was flat, and the NASDAQ closed lower. Prices initially opened higher before falling back down and then jumping back up late. It was a back-and-forth session, with little in the way of news or events until the close. After US markets closed, chip-maker NVIDIA reported its earnings result, which were ahead of consensus estimates. However, their forward guidance disappointed some and the stock initially traded lower in after-market trading. This wasn’t enough to send US futures lower on the whole however, with the DOW and SP500 futures jumping higher for seemingly no reason. How the market responds fully to NVIDIA in tonight’s session will likely determine the next directional move for US markets, and indeed global markets, and at this point, we don’t have a strong indiation of what that response will be.
Six of the eleven sector groups of the SP500 closed higher overnight, with Healthcare and Energy the strongest performers, followed by Materials stocks. Discretionary and Financials saw the most selling.
Techically, the SP500 looks to have bounced off support at the previous all-time high at roughly 5,880. Given a bounce off this level, we could see a move back to the recent resistance around the 6,000 point level. Should this level break, we could see a move all the way back to 5,760.
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