The XJO is expected to edge higher on open this morning following a meek but positive night in the U.S. Their futures are flat.
Yesterday we held the opening gains and managed to extend them through the sessions, only losing some of the intraday gains into the close. We pushed through key resistance at 8,250 but stalled at 8,300 key resistance. This level also represents the previous couple of peaks roughly, and arguably the top the most recent channel. We are only a stones throw from our all-time highs at roughly 8,380, but we will need to contend with 8,350 key resistance before then.
Our market has come back to a sort of equilibrium with the U.S, which bounced off their previous all-time high resistance which is now support. They are trading a similar distance from us above the 50 day MA.
By shorter-metrics we are starting to look overbought, which coincides with us trading near or at the top of the recent trading range. If the U.S remains bullish, expect us to continue higher as our mood looks to once again have shifted to a willingness to price in their gains.
The materials rallied yesterday from their lows thanks to a push from iron ore. Unless the U.S makes leaps and bounds and we choose to follow suit, we should expect some profit taking from the overvalued financials to flow into the relatively oversold materials.
US Markets
US shares closed mostly higher overnight, with the NASDAQ and SP500 closing higher, while the DOW JONES finished lower. US markets were driven higher by strength in Tesla, which is rallying after Trump’s election, due to Elon Musk’s perceived closeness to Trump. This will be a fairly quiet week, with the key event being a report from NVIDIA on Wednesday night Australian time. Expect markets to move on the back of the NVIDIA report. Otherwise, markets have jumped strongly, but with inflation currently remaining sticky (as is other economic data), and with Trump’s policies likely to be inflationary, markets are worrying that the probability of rate cuts moving fowards has been reduced.
Ten of the eleven sector groups of the SP500 closed higher overnight, with Energy, Communications, Discretionary, Real Estate, and Materials the strongest performers. Industrials were the only stocks to close lower on average.
Techically, on Friday the SP500 fell back to the previous all-time high at roughly 5,880, which held as support overnight. Should we see a bounce off this level, we could see a move back to the recent resistance around the 6,000 point level. Should this level break, we could see a move all the way back to 5,760.
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