We are expected to open flat this morning. The U.S closed lower overnight, but it seems we once again pre-empted their move. Their futures have moved further into the red however, so we may continue to selldown throughout the session.
We will contend with 8,200 support this morning. If U.S futures drag us through it, then the underlying uptrend line which comes at roughly 8,150 is the next key target. Beyond that, 8,100 is the most recent trough.
Short-term indicators are fairly normalised, albeit a little overbought. The materials cooled yesterday. Having rallied about 20% since early September, it made sense to seem some profit taking. The banks seem to have found a base for now. However, if the materials wish to continue higher, or the market wants to fall as a whole, then it would be hard to expect that base to hold. China is closed for the rest of the week, which could mean we don’t see too much action in the miners.
Iran retaliated to Israel’s attack on Lebanon overnight. Israel has promised a response. The escalation in the Middle East, coupled with uncertainty around the U.S economy, are likely causing markets to feel uneasy. Furthermore, U.S jobs data is due to be released on Friday night, which is a key macro-indicator their market is likely holding their breath for.
We should remain cautiously bullish to sidewards, especially whilst the uptrend line holds.
US Markets
US shares closed lower overnight, with each of the three major indices finishing in the red. Prices opened fairly flat, but sold off throughout the session as conflict between Iran and Israel escalated. US economic data was mixed overnight, with mixed manufacturing data and a lower than expected GDP forecast. The next major economic event for the US will come with Friday’s jobs report, which could advance the market’s recession fears, or which could assuage concerns and push things higher.
Three of the eleven sector groups of the SP500 closed higher overnight, with Energy the strongest performer, after prices spiked with the middle east tensions. Every other sector closed lower, with Technology the weakest performer, followed by Real Estate.
Technically, the SP500 has stalled out at potential resistance around 5,770, which would would have to break for further gains to look likely. Should the index fall from here, the previous all-time high around 5,670 should act as support.
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