The XJO is expected to moderately higher this morning with a strong US session pushing our futures back towards 8,200.

Our market showed great strength yesterday despite the lower close, as we only saw moderate selling after a very disappointing reopen in China and after a strong bearish US session the prior session. The China reopen in particular helped to reverse our earlier gains with a lack of fresh stimulus announcements forcing the large miners lower.

Iron ore ended up closing around 5 percent lower in China yesterday and the materials sector was one of the few sectors to close lower in the US overnight. We would expect to see softness in the materials space today as a result, and it is likely that other sectors of our market will pick up the slack.

Technically, we are stuck in a tigh range between roughly 8,150 to the downside, and perhaps 8,250 to the upside. Until we see a break of that range, sideways movement continues to look like the outcome.

US Markets

US shares rose overnight, with strength across each of the three major indices despite a lack of major news and events. US shares rose on the back of strength in technology shares, with strong buying in NVIDIA helping to fuel the buying of other AI related shares. US shares appeared happy to ignore the disappointing China reopen yesterday, as well as the Hurricane Martin which is baring down on the Florida coastline. The next major tests for US markets will come on Thursday night, with the inflation data, and Friday with the start of the earnings reporting season.

Nine of the eleven sector groups of the SP500 closed higher overnight, with Technology and Communications shares the strongest performers, followed by Discretionary and Staples stocks. Most sectors closed somewhat higher, except for Materials and Energy shares.

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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