The XJO is expected to edge higher on open this morning. This follows a reversal in the U.S overnight which saw their market retake their previous session’s losses to finish once again flirting with all-time high resistance. Their futures are flat.
Yesterday we reversed intraday losses after bouncing from key support at roughly 9,000. We finished practically flat. This morning, we should open flirting with 9,050. However, if U.S futures at least remain steady today, don’t be surprised to see our market finishing near our all-time high resistance at roughly 9,100. Yesterday was indicative that there remains a bullish undertow despite uncertainty continuing to settle in. With the U.S moving back towards their all-time high resistance and trading in ascending triangle, our market might prime itself today with an expectation of a break in the U.S tonight.
We should continue for now to assume the market will follow the trend and eventually break into fresh all-time highs. However, if the U.S fails here, then we will likely too. Furthermore, there seems to be some bearish divergence forming with the stochastic that may indicate we are due for a pullback.
US Markets
US shares closed higher overnight, with prices initially opening flat before rising throughout the session to finish in the green. Regardless, US markets have clearly stalled across the past week as uncertainty over the government shut down has led to some selling. Given that and the fact that US economic data has not been reported during the shutdown, the stalling shouldnt be unexpected. Despite the economic data black out, the Labor Department will make an exception by releasing its September CPI (inflation) numbers. This will provide the FED with a glimpse at the state of inflation and an insight into whether Trump’s tariffs are affecting consumer prices. It is likely the next directional move in US markets is based on that event.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Energy, Industrials, and Materials the best performers. Staples stocks saw the most selling.
Technically, the SP500 continues to hold below the all-time high resistance, which sits at roughly 6,750. The index remains on an overall uptrend, but that level would have to break for further gains to look likely. With the currently bullish momentum, a break higher is certainly possible. To the downside, the recently lows around 6,550 are now likely to act as support. Overall the index remains in an uptrend, with higher peaks and troughs – the index just set a new higher trough so we will need to look to see if a new higher peak (above 6,750) eventuates from here.
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