The XJO is expected to rally on open this morning following a continued move higher in the U.S overnight.
U.S futures are flat this morning. Over the past few sessions U.S futures have been largely in the red, often quite strongly. Yet the strong bearish move they have heralded hasn’t seemed to play out over the past few sessions, either not being as dramatic, or even reversing and finishing in the green. It makes them hard to trust at the moment, and our market has sort of clued into this reality.
Yesterday we managed to maintain our strength, despite U.S futures move strongly into the red. Our index was vindicated overnight, with the U.S continuing their move higher back towards their all-time highs. We will also follow suit, with an expected open near 8,490. It seems reasonable to suggest that we will test our previous all-time high key resistance at roughly 8,500 this morning, and unless U.S futures push hard into the green, to hold it today.
Generally, it still seems markets are heading back to their all-time highs. Of course, big question marks surround the three way see saw between Trump, the economy, and monetary policy. Trump has an ability to cause massive spikes in volatility, so anything is possible. Ultimately though, we trade what we see, and it is clear that the buy-the-dip mentality remains strong for now.
US Markets
US shares closed higher overnight, with buying across each of the three major indices, with investors shrugging off tariffs and weak tech earnings to continue pressing the buy button. When we left the office yesterday, US futures were strongly in the red, but prices rebounded throughout the overnight session. Investors bought things back up after a drop in treasury yields, essentially suggesting that the market is starting to price in futher rate cuts. On the earnings front, tech-giant Google fell over 7 percent after disappointing earnings results. In general, earnings haven’t been good this season, but that hasn’t been enough to disrupt the bullish movement. US government deficits are funding this bubble and until those deficits start to decrease, its hard to see meaningful selling.
Technically, the SP500 bounced back off the support and trend line early this week, the SP500 now looks likely to head back towards the all-time high just above 6,100. However, markets are very news driven at the moment, so there is a risk that something could come out to disrupt these technicals.
Eight of the eleven sector groups of the SP500 closed higher overnight, with Real Estate, Technology, and Financials the strongest performers. Communications stocks saw the most selling after disappointing earnings reporting from Google.
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