The XJO is expected to edge higher on open this morning following an indecisive night of trading in the U.S which saw their market retrace earlier session gains to finish only marginally in the green.
Yesterday our market had a strong day of buying, closing higher than the big day we saw last Thursday. Our rise yesterday was likely spurred on by positive U.S futures. Having already priced in their move overnight, coupled with red U.S futures this morning, our muted open makes sense.
We continue to trade in the point of the pennant pattern. We are running out of room, so we should expect a break soon. Given the recent volatility, it seems likely that the break is meaningful. However, considering the easter period can be quiet, and that the tariff issue has been laid to rest for now, it wouldn’t be surprising to see a lackluster break and continued sideward movement.
7,850, 7,750, and 7,650 remain the key levels for this market. If things remain quiet, expect the market to hang around these levels. Otherwise 7,950 to 8,000 remains the most recent peak, and 7,350 is the next major support.
US Market
US shares closed higher overnight, with moderate gains from each of the three major indices, though prices weren’t able to hold near their highs. Sentiment was boosted by comments from Trump, who stated that he is exploring possible temporary exemptions to his tariffs on imported vehicles and parts to give auto companies more time to establish manufacturing in the US. This comes after announcing a pause on tariffs for tech products. This drip feed of positive news is helping markets drift higher. However, economic damage is being done and eventually that will start to weigh on the market. It might take economic reports to start showing this however, and the economic data for the tariff period won’t start coming out for a couple of weeks.
Ten of the eleven sector groups of the SP500 closed higher overnight, with Real Estate, Utilities, and Staples the best performers. Most sectors saw moderate buying, with only Discretionary closing lower.
Technically, the SP500 has found some potential support around 5,000 and now looks like it might push back up to the downtrend line, which currently sits around 5,550. This leaves the index inside a big descending triangle, and we will need to wait for a break of the triangle for further moves to look likely.
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