The XJO is expected to tank on open this morning, near 8,800 at time of writing. The SP500 sold off overnight, but they managed to bounce from their key support once again to finish only marginally in the red. The Dow on the other hand took a shellacking and fell roughly 1.6% – which is likely part of the reason as to why our market is opening roughly 1.5% lower.
Though we managed to stall yesterday, we shouldn’t be too surprised our market has finally given up. Our market had been too uncharacteristically resilient in the face of surmounting terrible conditions – namely, further rate rises. The continued conquest of the middle east by America and Israel has only exacerbated the situation, and of course, the U.S selling off has facilitated the selling.
The first stopping point for our market was the 50 day MA, which comes in at roughly 8,900. This is a point of comfort and short-term equilibrium. However, now that we are expected to blow past it, the 200 day MA is the next clear target. Currently it comes in at roughly 8,775, and considering our open of 8,800 this morning, we should see it today. 8,750 to 8,700 also represents the lows and a key level of support since roughly the start of the year. There is a good chance that these levels keep our market elevated in the short-term.
US Markets
US shares fell strongly overnight, with selling across the three major indices. The selling came with spikes in the oil price, due to the continued closure of the Straight of Hormuz, which is one of the Iranian responses to the US and Israeli attacks. It was the sixth day of the conflict, with no end in sight. Investors are also worried that the spike in oil prices could lift inflation, which could reduce the chances of the expected Fed rate cut in the coming months.
Three of the eleven sector groups of the SP500 closed highre overnight, with Energy the best performers. Industrials, Materials, and Staples stocks saw the most selling.
Technically, despite the recent and continued selling, which saw the S&P500 trade as low as 6,710 intra-day, the index has always managed to close above the key support level at 6,800. With the index in a channel between this support and the all-time high at 7,000. We would need to see the SP500 close below 6,800 for further selling to look likely. Otherwise, we would expect an eventual bounce and rise towards 7,000.
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