The XJO is expected to open lower this morning near 8,900 (at time of writing).
On Friday, our market managed to smash through all-time high resistance at roughly 8,900. This is the third time in two weeks we have seen our market make fresh highs, likely driven by the prospect of further rate cuts. We have certainly outpaced the U.S, who typically leads our moves and outpaces us.
Our break into new territory has been followed by sidewards consolidation and using the previous all-time high resistance as support. In essence, we are making marginal gains and dog-legging higher. This morning seems no different. Having made fresh highs on Friday, our market is set to shed some of those gains and return to 8,900 – using the previous all-time high resistance as support. The fact the U.S was unable to break higher themselves on Friday night is also likely encouraging the breather.
Our market continues to look bullish, though the acceleration we have formed since the lows at the start of August is unsustainable in the medium or long term. We should expect a healthy mean reversion over the next couple of weeks. Either that, or a long overdue correction.
We are also halfway though an earnings season. For the most part, Blue Chips seem to be tanking on their reports. QBE, RIO, CBA, JBH come to mind. However, we have also seen some stella reactions from companies like AMP or ORG, or even WBC with their trade update. These mixed results are giving our market opportunity to continue moving higher, and for stocks that fell over to have a short memory and recover. JBH and RIO for example, recovered almost immediately.
Macroeconomic data remains ever important, even if markets seem to be shrugging the bad news. It is a quiet week, with eyes likely on the minutes from the last Fed meeting due to be released Wednesday night. Th U.S also has PMI data Thursday night, and Powell will speak Friday night. Nothing of real import locally.
US Markets
US shares closed lower on Friday, with moderate selling across the three major indices. US shares stalled out across the past few sessions, with markets becoming a bit skeptical that they will see as many Fed rate cuts as hoped. This comes after some stronger than expected producer prices last week, and with consumer prices also rising. Additionally, the market has been hopeful that the war in Ukraine was close to conclusion, and that Trump and Putin might reach a deal to end the hostilities. This wasnt the case over the weekend, with a meeting between the two ending with no agreements. This week will be all about the Federal Reserve, with Fed meeting minutes on Thursday night, and with the Fed’s Jackson Hole policy symposium. Expect markets to move on the perceived changes in probabilities for rate cuts.
Four of the eleven sector groups of the SP500 closed higher on Friday, with Healthcare and Real Estate the best performers. Financials and Technology stocks saw the most selling.
Technically, the SP500 stalled out over the past few sessions, with the index falling off on Friday. The index remains on an uptrend but may have found some resistance around 6,480, which would have to break for further gains to look likely. To the downside, the previous resistance at 6,400 would be the potential support to watch.
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