The XJO is expected to open higher this morning following a strong bounce from the U.S overnight. Their futures are flat.
We should open near 8,020, reversing the losses from yesterday. The U.S initially traded firmly lower but quickly rebounded after marginally stronger than expected CPI reading last night. They rallied back above their 50 day MA, and our recent strength was vindicated. Both the XJO and SP500 are now trading at similar levels relative to the 50 day MA – a short-term metric. This is likely why our market is not rallying as much as what the U.S did overnight – they were the ones playing catchup for once.
8,000 was a key level, but now we set sights on the key resistance at roughly 8,100 which also represents our all-time highs. 8,050 is also a marginal level that our market has roughly turned around from intraday during this consolidation, so we may see a similar thing occur today. However, with the U.S clearly showing renewed bullishness, it seems more likely that our market holds the opening gains and potentially extends them during the session.
US Markets
US shares jumped higher overnight, defying earlier lower futures to push firmly into the green. Large-cap technology stocks led the buying, with NVIDIA up more than 8 percent. NVIDIA jumped after a presentation and the movement may have saved the market somewhat overnight. Markets rose despite initially falling after slightly stronger than expected CPI, which almost guarantees that the first rate cut, expected next week, will be 0.25%. Outside of technology stocks, the market was actually fairly flat though it did rebound from strong initial selling. Technically now, the major US indices do look bullish after stabilising and finding support across the past week. We will now need to see if it is a return to the all-time high, or a lower peak for shares.
Six of the eleven sector groups of the SP500 closed higher overnight, with Technology the strongest performers, followed by Discretionary and Communications stocks. Most other sectors were fairly flat with Staples and Energy stocks seeing the most selling.
Technically, the SP500 has bounced off some support at 5,400 and overnight pushed through 5,500, which may have been acting as resistance. This indicates further gains for the SP500, with the most notable upside target being the 5,650 level – roughly the all-time high. Should prices not make it to that level, it would however be a lower peak which could indicate downwards movement.
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