The XJO is expected to rally on open this morning following a rally in the U.S overnight. Their futures are flat.
Yesterday we regained much of our intraday losses to finish only marginally lower. This morning we are expected to open near 8,050, completely reversing the losses from yesterday. We somehow continue to be surprised at the resilience of our market.
Historically, our market has often been skeptical of extended gains in the U.S, so much so that we would hesitate to price them in with the expectation of an imminent pullback. However, it feels the complete opposite at the moment. It is as if our market is predicting the bounce in the U.S and getting first in line. Not only we will reverse the losses completely before they do, our market is trading just over one per cent above the 50 day MA, where as the U.S is trading just over half a per cent below theirs.
Broadly speaking, our market is tracking sideward and consolidating in a broad range as the U.S shows signs of declining, but our market unwilling to stay low for too long. Roughly 7,900 to 8,100 is the range that we are trading in. It would be hard to expect our market to push through the 8,100 all-time high key resistance without permission from the U.S first. For now we should expect this to be the general range whilst we wait and see what happens.
US Markets
US shares rebounded overnight, ending the run of bearish sessions. US markets closed lower in the last four days of last week, but that streak ended overnight with broad-based buying. The movement seemed like a retracement of some of Friday’s selling, rather than necessarily a turning point against the recent selling. Indeed, Apple closed lower after announcing the iPhone 16 overnight. The major event for this week will come on Wednesday night with the release of the US CPI data for August. Investors will be hoping that the reading will clear the way for rate cuts to begin at the FED meeting the week after, but that CPI isn’t too weak as to suggest recession.
All eleven sector groups of the SP500 closed higher overnight, with Discretionary, Industrials, Technology, and Financials stocks the best performers. Most sectors saw notable buying.
Technically, the SP500 may have found some support at 5,400 overnight, with the index bouncing from this level. The market was unable to close above 5,500, which was previously a support level and which may now be acting as resistance. Should we see a move above 5,500, that would likely indicate a rebound. Should we see a break below 5,400, further selling would look likely.
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