The XJO is expected open higher this morning despite a tumultuous night of trading in the U.S. Their market finished practically flat after trading a decent measure higher and lower throughout their session. Trump lashed out at China again, but perhaps markets are just shaking their heads and ignoring the hot air blowing from the Whitehouse.
Our market the past couple of sessions have seen us hold and rebound off the 50 day MA. Both our market and the U.S clearly have buying support here, despite all the trouble. Our bullish open this morning despite flat U.S futures, and a flat close overnight, could be that our market simply believes that this recent tirade will surmount to nothing – as usual. Furthermore, both the materials and financials finished firmly in the green overnight. Indeed, most sectors did, with only Tech being the only real let down. Over half out market is dominated by materials and financials, with tech representing little so it’s not too surprising to see a strong open.
We are expected to open near 8,970 at time of writing, however our futures keep trending higher. It wouldn’t be surprising to see us kiss 9,000 today, though we shouldn’t expect to necessarily hold all the gains. Despite our strength, there is a still an underlying uncertainty.
Regardless, next stop: all-time high resistance. It will be the third time we have tested it in two weeks. We should expect it to hold for now, but it wouldn’t be surprising to see us break higher.
US Markets
US shares had a wild back-and-forth session overnight, which ended with the average stock finishing only slightly lower. In a speech in Philadelphia, Fed Chair Powell reiterated his concerns about the US jobs market, which boosted sentiment for further rate cuts – including at the next Fed meeting at the end of the month. We also saw some of the largest US banks report earnings overnight, with Wells Fargo and Citigroup rising on their results, while JP Morgan and Goldman Sachs fell. Despite the slightly lower average move, this was mostly dominated by selling in technology shares, with most sectors closing higher. Still, there is plenty to worry about for investors, with trade tensions between the US and China unlikely to subside in the immediate, and with the ongoing US government shutdown.
Eight of the eleven sector groups of the SP500 closed higher overnight, with Staples, Industrials, and Financials the best performers. Technology shares saw the most selling.
Technically, despite a break of the uptrend LINE on Friday, the SP500 remains on an uptrend and will remain so until it starts setting some lower peaks and troughs. The index does look very overbought, which perhaps exacerbated Friday’s breakout. With the breakout on Friday we might see a move to the support level of 6,500, which was a previous level of resistance, and which may now act as support. This is also where the 50-day moving average sits, which may also act as support. Assuming these levels hold, we would anticipate a bounce back to the all-time high resistance level of roughly 6,750.
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