The XJO is expected to edge lower on open this morning. The U.S was up overnight, but their financials were flat and their materials were down one per cent.
We should flirt with 8,250 on open this morning, they key support we tested yesterday. It is also roughly where the broader underlying uptrend line comes in.
Our index has fallen roughly three per cent, wiping out just over half of the accelerated gains we saw through November. We have formed a good base for any Santa rally that may come. Furthermore, it has not really been within our nature in recent history to fall more than four or five days in a row. Yesterday marked the fifth day, so we should expect a rebound soon.
Finally, we have seen selling in our materials, likely led by the U.S. This is unusual considering how strong iron ore has been. Our materials have plenty of catching up to do, and now that they have returned back to their key support, are in a good position to do so. If our market does bounce from around these levels, we should expect our materials to help and possibly have the lion’s share.
US Markets
US shares were again mixed overnight, with technology stocks dragging the SP500 and NASDAQ higher, while the DOW JONES closed lower for the eight straight session. It was another record high for the NASDAQ, but outside of a handfull of large technology stocks, US markets have been falling. Overnight US economic data showed a mixed picture of the US economy, with the services sector remaining strong while the manufacturing sector contracted by more than expected. This will be a big week for US data and events, with retail sales tonight, a likely Federal Reserve rate cut tomorrow night, a GDP reading on Thurday night and PCE price (inflation) on Friday night. With this data it is entirely possible we see the SP500 either break higher or lower out of its current trading range (6000 – 6100) by the end of this week.
Four of the eleven sectors of the SP500 closed higher on overnight, with Discretionary, Communications, and Technology again the best performers. Every other sector closed lower, with Energy, Healthcare, and Materials the best performers.
Techically, the SP500 is grinding along below the resistance at 6,100. Given the stall here, it is likely we could see the index move back towards 6,000, but overall the index is in an uptrend and we would expect higher peaks and troughs for now.
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