The XJO is expected to rally on open this morning following fresh all-time highs in the U.S overnight. Their futures are flat.
Yesterday we sold down in the morning session, likely exacerbated by U.S futures that had moved hard into the red. Late in the afternoon however, our market managed to crawl back to finish flat.
The U.S did indeed open lower, rebounding off their all-time high resistance. However, they too managed to retake their intraday losses, break through all-time high resistance, and close into new territory (albeit marginally). Our market’s response this morning is to rally back to the top of the trading range and retest resistance at 8,880.
Whilst we have been consolidating, our market has been quite reluctant to price in U.S gains, remaining cynical to their moves, and future rate cuts. However, despite the hawkish RBA, perhaps the U.S has displayed enough confidence our market may finally feel comfortable rallying too. Perhaps a break of the channel is imminent.
US Markets
US shares managed to close higher overnight, despite their government shuting down. The US government funding limit has once again been reached and its looking unlikely that a new agreement will be signed to reopen the government any time soon. This uncertainty has so far not been enough to disrupt the current upwards momentum, which is pushed US markets into fresh all-time highs. There will be some major data tomorrow night, with the release of US unemployment. The members of the Fed favouring rate cuts have been pointing to the weakness in the jobs market as the reason that further cuts need to happen, so Friday’s jobs report could either promote or demote another Fed cut. The jobs data may need to balance on a tightrope for investors, revealing a weakening labor market that supports further rate cuts without adding to fears about a recession.
Four of the eleven sector groups of the SP500 closed higher overnight, which were Healthcare, Utilities, Technology, and Discretionary. Materials, Financials, and Communications stocks saw the most selling.
Technically, despite a lower open, the SP500 continued higher and showed a bullish candlestick with open and close in opposite thirds and a higher high and low. The index has recently bounced off a potential uptrend line and overnight managed to close above the recent peak and potential resistance of 6,700. This suggests further upwards movement and with the index recording higher peaks and troughs (on an uptrend), it was expected that the next peak would be beyond this level. The index remains on a short-term and longer-term uptrend and the stochastic is also pointing higher, confirming the bullish momentum.
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