The XJO is expected to rally on open this morning at 9,175 at time of writing. This follows a continued move higher in the U.S overnight which saw their market break the recent consolidation range higher. They still remain in the broader channel, but their all-time high resistance is within arm’s reach.
This morning, we are set to smash through our own all-time high resistance. Yesterday we rallied strongly, peeking our head through, but this morning we will cleanly break it. Without the U.S holding us back, our market has been unleashed over the past couple of sessions. We have maintained a strong bullish midframe for the past few weeks, with only a couple of jitters causing us to retrace in our pursuit higher. However, it is uncharacteristic for our market to continue making consecutive all-time highs. We typically instead immediately selldown, or consolidate briefly first before doing so. Like a dog chasing the mailman’s car, we have had tunnel vision, chasing the all-time high with reckless abandon. Now that we have caught it, perhaps we won’t know what to do. Perhaps we will pause and take a beat to recognise all the negative sentiment building.
CPI came in stronger than expected yesterday. CBA and Westpac instantly raised interest rates, not bothering to wait for the RBA do so first. It is mind boggling that the market maintained strength following the data. A return to a contractionary cycle, should so exactly that, contract things – including our market. Indeed, it is reasonable to suggest the main reason our market has rallied over the past couple of years (but less so recently) is due to expansionary monetary policy – where things expand… including the market.
All-time high resistance at roughly 9,100 is now key support. We can likely safely assume 9,175 to 9,200 will become the next resistance but we will have to wait and see.
US Markets
US shares closed higher overnight, with each of the three major indices closing in the green. It was a tech-led rally, with most US sectors closing lower. US markets are still trying to weigh up how much AI will disrupt the US economy and labour market and how much it will help existing businesses. Richmond Fed President Tom Barkin chimed in on the issue, saying it is not clear that the AI rollout will displace workers, adding the technology could enable workers and help the job market become more efficient. After US markets closed, NVIDIA, the world’s largest listed company reported results, beating consensus expectations and rising in after market trading. The results were solid and are helping US futures higher, though it is clear that the growth in spending on AI infrastructure is starting to slow.
Only five of the eleven sectors of the SP500 closed higher overnight, with Technology, Financials, and Communications the best performers. Industrials and Real Estate stocks saw the most selling.
Technically, the SP500 has once again bounced from the support level at 6,800. With the index now potentially in a channel between this support and the all-time high at 7,000. Given the bounce overnight and given the continued bullish market, the index now looks like rising to the the all-time high at 7,000. We would need to see a break above 7,000 for more gains to look likely. Should the market break below 6,800, that is where we could see more selling.
Want to continue reading?
This is only an excerpt from todays TradersCircle Members Morning Market Update and doesn’t include the key data and charts our traders are keeping an eye on every day. Become a member today for this plus full length mid-day and end of day updates, trade recommendations, trade group webcasts, and much more!