The XJO is expected to rally on open this morning. The U.S was marginally higher overnight with Materials and Financials posting roughly 1% gains. Their futures are mixed.
The sugar rush from our CPI reading continued yesterday. Coupled with strong U.S futures, our market pushed into fresh highs. We pushed through 8,500 key resistance, moving to our all-time intraday high of roughly 5,820. However, we were unwilling to commit to the break and our market pulled back to sit just below 8,500 resistance once again.
With decent gains in the U.S in both their Materials and Financials, and the afterglow of the CPI reading, our market is expected to have another crack this morning. We should open near 5,830, a relatively clean break higher. U.S futures are flat, and provided they don’t dip, it seems reasonable to suggest that opening gains are held. 8,500 should become support.
It has been a stellar run for our market over the past month or so, rallying roughly 6% from our lows, and fresh highs imminent. It would be reasonable to expect some profit taking soon. It is common for our market to make fresh highs, then pullback almost immediately. It also likes whole numbers, so we should expect 8,550 or 8,600 before the turn around.
US Markets
US shares had a back-and-forth session overnight, with US futures firmly higher before their markets opened, yet they pulled back after crappy European GDP data, which showed the Eurozone teetering on recession. US GDP overnight was also weaker than expected, so the market was weighing the slowing economic growth against the expectation that the slower growth will trigger interest rate cuts. Additionally, US earnings have been ok, or at least haven’t been negative enough to trigger selling. After US markets closed, Apple reported results, which look worse than expected, the share price was trading slightly lower in after-market trading.
Technically, The SP500 recently bounced off the 6,000 point level and now looks bullish to the all-time high at 6,100. Should the index break through this level, it would indicate further gains. A continued hold below this level could proceed a period of selling.
Ten of the eleven sector groups of the SP500 traded higher overnight, with only Technology falling after mixed Tech earnings. Utilities, Real Estate, Healthcare, and Industrials were the best performers.
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