The XJO is expected to open around 15 points lower this morning, at roughly 8480. This comes after US markets were fairly flat overnight, though their futures are currently a little higher.
Our market yesterday pushed through resistance at 8,450 yesterday and climbed to 8,500. We did end up finishing below this level, and given that our market likes 50 point increments, 8,500 could prove to be a bit of a sticking point.
The strength in our market is a little odd, as US markets have only been driven higher by technology stocks for the past few sessions, with most US sectors and particularly their banks, dipping for the past few sessions.
Regardless, we do still have bullish momentum and that should hold us up here until something breaks that momentum. That could come with today’s GDP growth numbers, which are expected to show very poor 1.1% YoY GDP growth, which would be the 7th quarter of a per-capita recession for Australia. However, ultimately, it is likely selling in US markets that will be needed to break our upwards movement.
Don’t be surprised to see 8,500 hold. If it doesn’t however, then 8,550 is likely the next target. We were expecting our market to break higher, but we aren’t expecting much more than what we are seeing on open this morning in the short-term. Our market will be trading in overbought territory, and doing so irrationally, so it would make sense to see some sidewards movement and possibly some profit taking soon.
US Markets
US shares were again mixed overnight, with the DOW JONES lower, the SP500 flat, and the NASDAQ closing higher. It was again the technology stocks that drove the gains, with the majority of US sectors closing lower overnight. It was a back-and-forth US session, with the SP500 initially trading lower before rebounding to finish very slightly in the green. There was a lack of major news or events for US markets overnight, though a report did show more than expected US jobs openings, which suggests that US employment numbers on Friday night will be fairly positive.
Only three of the eleven sector groups of the SP500 closed higher overnight, with Technology, Discretionary, and Communications rising. Every other sector closed lower, with Utilities and Financials seeing the strongest selling.
Techically, the SP500 pushed through the 6,000 point resistance level on Friday, indicating further upwards movement. Strength in technology stocks pushed the market to further highs overnight, though the gains were small. Its hard to say where this move may end, but on a pullback, the previous resistance at 6,000 points is likely to act as support.
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