The XJO is expected to edge lower on open this morning.
The U.S was closed overnight. Their futures closed slightly in the green, but didn’t break through their key resistance at their all-time high. Their futures this morning are flat. It is their failing to push through that is likely causing our market to pullback this morning.
Yesterday, we tried to lead the charge, breaking through our all-time high key resistance at roughly 8,450. We were bolstered by positive U.S futures which were heralding the same move. However, by the close our market had lost confidence. We ended up giving up about a third of our intraday gains to settle just below 8,450 resistance, and this morning we are set to reverse further.
We should open near 8,425, with 8,400 being the next key level of support, and roughly where the short-term accelerated uptrend line comes in.
Taking a step back, our market is clearly flirting around at the top of the range. On several occasions over the past couple of weeks we have cracked into fresh all-time highs, but reversed much of the intraday gains into the close. We can’t seem to commit, but at the same time are showing a willingness for further gains. Indeed, of the past two weeks, only three sessions have seen our market close in the red.
We continue to trade in the point of the ascending triangle. Our highs of yesterday were 8,480, which is now a loose resistance. However, if our market does break the triangle higher, which is to be expected, then 8,500 seems the most reasonable target. This is because 8,480 is close enough o 8,500 and our market seems to like having key resistances and supports at every 50 point increments or so. Being the index, we shouldn’t be too precise with identifying key levels anyway.
By short-term technical metrics, our market is not that overbought. We remain a healthy distance above the 50 day MA, and the short-term stochastic are only now just peeking into the overbought area. It is the fundamentals that make our market so overbought that it is hard to rationalise the bullishness. In essence, our market is trading in a bubble, but we don’t seem to care for now. The good thing is, from a trading perspective, trading the technicals (particularly on the bullish front) seems to be quite effective. Caution is advised though.
US Markets
US shares were closed overnight for the Thanksgiving public holiday. US markets will have a shorter trading session tonight. US futures markets did push moderately higher during the overnight session as they followed strength in European markets.
Technically, the SP500 roughly held resistance around 6,000 points. It is now at a key decision level, either it will break above or down from this level, which will suggest the next directional move. Should it fall, previous support at 5,880 is the likely target. Should it rise, its hard to say where it may head to.
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