The XJO is expected to open marginally lower this morning following a slight pullback in the U.S overnight. Their futures have also moved into the red.
Yesterday we closed flirting with key support at around 8,200. This morning we look set to clear it. The 50 day MA comes in around 8,150 – the next clear target that we will likely see today, especially with negative U.S futures.
CPI came in mixed yesterday with headline lowering slightly, but core increasing slightly. The market responded positively initially, but sold off into the close to finish near our lows. The initial response was curious as the headline inflation was likely affected by government subsidies around energy, but core shows that inflation remains steady. This is not what we want to see.
If we continue lower from here, then 8,100 is the next clear level of support. The pullback yesterday could be a lower peak, indicating that we are seeing a change in trend. However, with the U.S maintaining its highs, it still seems more likely that sideward to bullish is the next move for our market.
Keep in mind the U.S still has more company reporting to come, as well as key job data Friday night.
US Markets
US shares closed slightly lower overnight, with selling across each of the three major indices. Selling was seen after the stronger than expected PCE prices (a measure of inflation), while US economic growth was perhaps a little slower than expected. The data caused a further reduction in bets on US rate cuts, and bond yields continued their rise. We will see the full US PCE price data (inflation) report tonight, and that could trigger directional movement either way – if inflation continues to run hot, expect to see further selling as bond yields rise. After US markets closed, disappointing earnings reports from Microsoft and Facebook sent US futures lower in after-market trading. Tonight we will see equally important reports from Apple and Amazon.
Six of the eleven sector groups of the SP500 closed higher overnight, with Communications the strongest performers, followed by Financials, and Real Estate stocks. Technology stocks saw the most selling, while most sectors were fairly flat.
Technically, the SP500 remains stuck in its 100-point sideways range. It is holding above key support at 5,770, which was previously the all-time high resistance. It has also held below the most recent all-time high at 5,870, which is now acting as the resistance target to the upside. Should 5,770 support break, we could see a move back towards 5,670.
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!