The XJO is expected to edge lower on open this morning following a quiet night in the U.S. Their futures have moved into the green.
Yesterday we pulled back, as expected when making a fresh all-time high. However, we managed to retake those intraday losses to finish in the green, and thus set new highs. This is rare for our market. We don’t typically make consecutive all-time highs.
This morning, we are once again expected to open lower, perhaps we will get a repeat and close into fresh highs once again. There doesn’t seem to be much that can stop this market. With the U.S quiet, having their own domestic issues, our market is running its own race.
The acceleration from our lows back at the start of August is unsustainable though. It has lasted two weeks so far. The underlying uptrend comes in at just above 8,700, which is a while away. Our short-term stochastic are in the overbought area, and have been so for over a week. We also haven’t met with the 50 day MA since the April. Some mean reversion would seem healthy, it is just hard to suggest when. For now, we should continue to expect our market to continue higher to sideward. Considering we have seen a healthy dose of “higher” lately, it seems more likely that we see more “sideward” soon with a dose of profit taking.
US Markets
The U.S was quiet overnight, with little to no action across their major indices. The SP500 closed one point lower, and the days range was only 17 points. With little to no news, their market seems like they are simply taking a breather at the top of the range. They are likely trying to justify trading at all-time high resistance, in conjunction with the shifting sands in perception of U.S monetary policy. It is reasonable to expect continued consolidation until there is a catalyst – likely to come in the form of the FOMC minutes Thursday night and/or Powell speaking Friday night.
Five of the eleven sector groups closed higher overnight, albeit marginally. Most of the weight was in the selling. Industrials had the strongest gain of 0.4% whilst Real Estate sold off 0.95% and Com. Services faring not much better.
Technically the SP500 seems to be grinding between their all-time high resistance at roughly 6,480, and their previous all-time high resistance (now support) at roughly 8,435. They remain in a firm ascending channel. Their recent acceleration that began at the lows of the start of August seems to be running out of steam. The stochastic continue to hang around the overbought area and just crossed, indicating a change in direction. It wouldn’t be surprising to see their market engage in some healthy mean reversion, and return to the underlying uptrend. At this stage, the uptrend line comes in at roughly 6,340 – though we should expect their market to be trading there in the short-term. Finally, the last time they met with the 50 day MA was back at the end of April – so they are due.
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