The XJO is expected to fall on open this morning after US markets again closed lower overnight. The futures are pointing to an open around 8,590 – roughly yesterday’s low.
Yesterday we rebounded from our inital lower open to close slightly in the green. However, it wasn’t the most convincing rebound. The Australian market is looking particularly weak after signals that the RBA might not cut again this cycle.
Today the RBA meeting minutes will be released and this will influence the market’s thinking on rate cuts. Don’t be surprised to see some upwards movement on the release, as the RBA might be a little more dovish than anticipated – as most of the hawkishness has developed after the last meeting took place.
Also denting sentiment is the recent Australian bank reporting, which was poor, and which could herald the end of the multi-year banking uptrends. For this to happen though, we might need to see some more strength in the miners, but iron ore prices have languished across the past week.
Regardless, despite another lower open today, we would expect a bit of a bounce for Australian shares soon, given the recent strong selling that was in excess of what was seen in other parts of the world.
Technically, the XJO again closed right on the major support 8,630 yesterday. The futures again have us breaking below this level on open today. Should we close below this level, that would indicate more technical bearish movement, with the next downside target the 8,540 support level. Should this level be retaken by the close, that would indicate a move back up to the previous support at 8,740 – which may now hold as resistance.
US Markets
US shares closed lower again overnight, with selling across the three major indices. The selling continues to be driven by nervousness around bubbles in AI, excessive valuations in the market in general, and a potential end to Fed rate cuts soon. Nvidia will report quarterly results after Wednesday’s closing bell (Thursday AEDT) – it wouldn’t be an exaggeration to say that this event could determine whether markets keep falling to a correction point – or whether they rebound from here.
Only two of the eleven sector groups of the SP500 closed higher overnight, which were Communications and Utilities. Financials, Energy, and Materials stocks saw the most selling.
Technically, the SP500 broke below its uptrend line, below its support level, and below the 50-day moving average overnight. This is all a bearish signal, potentially suggesting we will see further selling to perhaps the major 6,550 support level. This is however, some potential support at the overnight close around 6,650 so we will need to watch what happens tonight. Overall US markets look to have set a lower peak, which suggests we could be witnessing a changing of trend.
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