The XJO is expected to open lower this morning, after selling in US markets overnight. Our futures are pointing to a fall of around 50 points on open, and an opening level just above 7,800.
Yesterday our market reversed from the downtrend line and resistance at 7,900. US markets did a similar move overnight. This suggests we are continuing with this trend, and that we could retest the recent lows at 7,750.
Overall our market is following US markets, and as they are falling, so are we. Local news has proved unimportant to our market (really for the past 18 months), but we may still see one day shocks on local data and events. Tomorrow we will see Australian unemployment, which is expected to be unchanged in 4Q24 – its hard to see this having much effect.
Rather, if the US continues to head lower we will too. We have plenty more room to the downside and our shares remain historically expensive. Confidence in the banks has been rattled after a second year of flat-to-lower earnings, and iron ore prices remain fairly subdued.
US Markets
US shares closed lower overnight, with selling across each of the three major indices. Shares fell with the recent downwards momentum, with the SP500 perhaps falling from the downtrend line. Investors remain nervous, not only because the Trump tariffs are likely to slow the economy and lift prices, but also because of unprecendented political change in America. Tomorrow night will see the US Federal Reserve report on their March meeting, with no change in rates expected. Instead, the market will look for any discussion on the balancing act of keeping the economy strong, yet stopping prices from rising too strongly – a balancing act that has been complicated by Trump and his tariffs.
Only two of the eleven sector groups of the SP500 closed higher overnight, with Energy and Healthcare ekeing out small gains. The remaining nine sectors fell strongly, with Communications, Discretionary, and Technology the worst performers.
Technically, the SP500 has broken below and has now fallen to the level of a technical correction (10% fall from the peak), which comes in around 5,540. Over the past few sessions it has bounced back towards the downtrend line, which it fell from overnight, this would indicate a move back to 5,540. Should the index fall below 5,540, it would suggest continuing lower to the next downside level, which would be previous support at 5,420. Should the market continue to rebound from here and break above the downtrend line, the previous support at 5,800 – 5,850 is likely to act as resistance.
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!