The XJO is expected to open flat this morning following a muted night of trading in the U.S. Their futures are also flat.
The U.S was unable to extend their gains overnight, and their meek move should be reflected in our session today. China has been causing issues for our materials space, which has undergone profit taking from their breakneck rally since the end of September.
If our market were to find strength to try and follow the U.S into fresh highs, it seems we would once again need to turn to our banks – but of course they are tired from carrying our market for most of this year.
These juxtaposing forces in our market seem like they could keep us range bound for now. The next key resistance is roughly 8,300 which represents our all-time high. The key support, and the bottom of the recent range is roughly 8,100. In the medium term, we should continue to assume our market will gradually (and perhaps reluctantly) continue higher, but we remain cautious.
US Markets
US shares closed lower overnight after their CPI (inflation) report came in stronger than expected. The report showed inflation in September grew at the same pace as in August, which suggests that the FED may have been too aggressive in cutting rates by 0.50% in September, and that future rate cuts are likely to come slower than previously expected. Still, the report wasn’t hot enough to suggest that things are about to reinflation. Additionally, the report also suggests that the economy isn’t headed towards an immediate recession as some commentators have suggested. US markets are also about to enter a company earnings reporting season, with several large banks reporting earnings tonight. Prices do look very expensive up here, but for now, analysts continue to predict a narrow path forward of strong earnings growth but with inflation slowing from this point and with interest rates being cut.
Three of the eleven sector groups of the SP500 closed higher overnight, with Energy the strongest performers. Most sectors were fairly flat, with Real Estate stocks seeing the most selling.
Technically, the SP500 broke above the all-time high resistance level at 5,770 on Tuesday night. Overnight the index held that 5,770 as a potential support level. This indicates further upwards movement, though its hard to say where that movement may rise to.
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