The XJO is expected to edge higher on open this morning. Our market was closed yesterday to observe Australia Day.
The U.S pulled back immediately after making fresh all-time highs. Their market stalled on Friday, and sold off significantly last night, retuning their SP500 index back to the comfort of their 50 day MA.
Most of their recent rally, and fall that proceeded it was on the back of Tech, which is not well represented in our market. Instead, over half our market is made up of both the Financials and Materials. Their Financials actually grew overnight, and their Materials finished marginally in the green, so it isn’t too surprising to see our market holding steady for now. It also certainly helps that U.S futures are flat to green and not showing further falls.
If the U.S does continue its descent however, our market will of course eventually follow – especially if the selling spreads to other sectors and doesn’t remain isolated largely to Tech. Our market closed just above 8,400 resistance, and our 50 day MA is only just shy of a 100 points away at roughly 8,325. It remains a good target if the U.S doesn’t rebound from here.
Key support remains at 8,350. This has been a major level for our market over the past month or so. There is also an ascending channel in play, expressing the short-term uptrend our market has been trading in since the lows in late December.
The technicals point to a continued sideward to bullish market, with room to pullback to 8,300 – 8,350 in the short-term if jitters remain. The U.S is quite volatile however, as it continues to digest the big question marks surrounding the future of Trump’s presidency, monetary policy, and the economy.
Things are up in the air. It’s a three way see-saw between the economy, Trump, and Powell, and markets are trying to see a future that remains quite murky. The last Fed meeting was rather hawkish, but some key U.S macro-economic data has been cooling. Trump threatens Tariffs and deportation, which are both inflationary. He has also threated Powell, suggesting that he should be fired from the position. Powell has remained firmly in opposition to the president’s rhetoric so far. The next Fed decision is at 6am (AEST) Thursday morning, so we may see some cooling as markets head into it.
Other news this week is Consumer Confidence numbers from the U.S Tuesday night, local GDP numbers on Wednesday, and U.S GDP numbers on Thursday night. It’s a big week ahead, and we should be prepared for anything.
US Markets
US shares closed mostly lower on Friday and Monday night with prices retreating after fresh tariff announcements from President Trump, as well as with concerns that big-money US artificial intelligence models are losing ground to cheaper Chinese alternatives. There was a late rally for US shares overnight however, that pushed the DOW JONES into the green and cut the losses on the SP500 and NASDAQ. The moves look very odd given the earlier volatility and negative news, but we live in strange times. NVIDIA, 2024’s market darling, fell 17 percent with the AI concerns, and the strange moves do show that US shares are at risk at these elevated levels, with negative news triggering strong volatility.
Technically, The SP500 fell back to the 6,000 point level, which it held (despite earlier trading below this level). This level may now act as support, though we did see a break in the short-term uptrend line. The longer term uptrend is definitely still in-tact however, so we have to continue to assume bullish movement.
Six of the eleven sector groups of the SP500 closed higher overnight, with Staples, Healthcare, and Financials the strongest performers, with all rising strongly. Technology saw very strong selling, with Utilities and Energy also seeing notable selling.
Want to continue reading?
This is only an excerpt from todays TradersCircle Members Morning Market Update and doesn’t include the key data and charts our traders are keeping an eye on every day. Become a member today for this plus full length mid-day and end of day updates, trade recommendations, trade group webcasts, and much more!