Our market is set to rebound this morning following a flat finish in the U.S overnight where their market was able to retake miner intraday losses.
Both our market and the U.S have practically reverted back to the 50 day MA – a point of comfort in the short-term as markets weigh up the current environment. It is not surprising to see a meek and indecisive session overnight and we should follow suit.
7,950 has also been a key action point for our market. If we rally from here, then 8,000 is the next key level of resistance. However if falls are due, then 7,900 is the next key level of support.
US Markets
US shares were fairly stable overnight and actually traded higher initially before pulling back. Overnight US economic data was mixed, with stronger than expected factory orders, while there were fewer job openings than expected. The next major event for US markets will be Friday’s jobs report. A weak number here will likely lead to further selling. Indeed, a weak jobs number contributed to the selling at the start of August. Some in the market are now predicting a 0.50% rate cut from the Fed, and that is allowing them to maintain their bullish conviction in such a historically expensive market. A 0.5% cut I fell would be extremely risky. Regardless, US markets have been shaken somewhat by recent events, we now need to see if that will continue.
Five of the eleven sector groups of the SP500 closed higher overnight, with Utilities the best performers, followed by Staples. Energy stocks saw the most selling, followed by Materials stocks. Most other sectors were fairly flat.
Technically, the SP500 fell to the support at 5,500, which it held overnight, though not convincingly, with prices retreating from the intra-day highs. The index has now potentially set a double-top pattern, which could lead to further selling, but we would need to see a break below 5,500. Should the index rise from here, the recent peak at 5,650 would be the upside level to watch.
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