The XJO is expected to open flat this morning despite a pullback in the U.S overnight. Their futures are also flat.

Yesterday we continued the bounce from key support at 8,100 to finish firmly in the green. We finished at roughly 8,200 which is a point of comfort for out market during this consolidation and represents a sort of middle of the range.

Despite the pullback in the U.S overnight, considering they are still trading in their tight consolidation range, our market is happy relaxing here for the moment. We may pullback further during our session today, especially if U.S futures move into the red, but ultimately shouldn’t expect much – markets are simply range bound for now.

Minutes from the last RBA meeting will be released today at 11:30am (AEDT). Our market doesn’t really care what is going on locally but it might be interesting to look closer at the rhetoric around the RBA and the future guidance on monetary policy.

US Markets

US shares fell overnight, with selling across each of the three major indices. US shares fell with a rise in treasury yields as investors reduced bets on further US rate cuts. It comes after the much stronger than expected US jobs report on Friday, which calls in to question whether the Fed’s 0.50% rate cut was too much too quick. There is a worry that US inflation could start to return and we will see an update on this on Friday, with US CPI for September – if it comes in stronger than expected the market might start to forecast far fewer rate cuts than current, perhaps even further rate rises. Also starting on Friday will be the US company reporting season, which is also likely to drive movement.

Ten of the eleven sector groups of the SP500 closed lower overnight, with only Energy stocks managing to eke out a small gain. All other sectors were lower to some degree, with Utilities, Communications, Discretionary, and Financials the worst performers.

Technically, the SP500 last week held support at 5,675 and bounced off that level on Friday. It held below the all-time high resistance at 5,770 however. This leaves the index in a tight sideways range and we would need to see a break of either 5,675 or 5,770 before further directional movement looks likely.

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