The XJO is expected to open lower this morning following a practically flat and uneventful session in the U.S overnight. Their futures are flat.
Yesterday we once again led the charge, moving back to all-time high resistance at roughly 9,100. This was likely in anticipation that the U.S would also make fresh highs tonight, as we had done on Thursday. If they had done so, it is reasonable to suggest that our market would be opening higher this morning. Alas, they held resistance in a fairly lacklustre session, our market is translating the inaction to a selldown this morning.
We should open just below 9,050 (at time of writing), in a clear rebound from all-time high resistance at roughly 9,100. We should practically wipe out most, if not all of yesterday’s gains on open this morning (provided the futures remain where they are by then). It wouldn’t be surprising, however, to see most of the damage done on open and for our market to rebound intraday. The bulls seem to be in control, after all, and there doesn’t seem to be a strong reason for an extended selldown through our session today.
The trend remains bullish in the short and long-term, and we should continue to assume the market will track higher and make fresh highs for now. Of course, the intrinsic risks our market (and practically most western markets face), that caused the recent selldown and consolidation, remain present. They have not gone anywhere, but, as usual, the promise of interest rate cuts has become the dominant fixture in both our market’s mind, and the U.S’s.
In theory, the U.S will release CPI data tonight. They were meant to last week, but it was delayed by the ongoing government shutdown. It seems reasonable to suggest that they may delay it again, despite what officials have promised.
US Markets
US shares were mixed overnight, but largely flat. Shares were perhaps a little reluctant to rise after Trump admitted that he might not meet with Chinese President Xi JinPing later this month, which was when their meeting was expected. Given that and the fact that US economic data has not been reported during the shutdown, the stalling shouldnt be unexpected. Despite the economic data black out, the Labor Department will make an exception by releasing its September CPI (inflation) numbers. This will provide the FED with a glimpse at the state of inflation and an insight into whether Trump’s tariffs are affecting consumer prices. It is likely the next directional move in US markets is based on that event.
Only three of the eleven sector groups of the SP500 closed higher overnight, which were Discretionary, Industrials, and Healthcare. Utilities, Communications, and Materials saw the most selling.
Technically, the SP500 has pushed back up to the all-time high resistance at roughly 6,750 before stalling overnight. That level would have to break for further gains to look likely, though with the currently bullish momentum, a break higher is certainly possible. To the downside, the recently lows around 6,550 are now likely to act as support. Overall the index remains in an uptrend, with higher peaks and troughs – the index just set a new higher trough so we will need to look to see if a new higher peak (above 6,750) eventuates from here.