The XJO is expected to open higher once again this morning, following a continued move higher in the U.S. Our market should flirt with key resistance at roughly 8,900 on open, and the U.S is within arm’s reach of their all-time high resistance. Their futures are flat, and if they provide little indication, they will break higher, it would be hard to expect our market to commit much further than our opening gains this morning.
It has been an extremely volatile period for our market recently, a stark contracts to what we saw even a month ago. The XVI (our volatility index) spiked with the recent selling, and remains well above quarterly, half yearly, and yearly averages. These spikes don’t typically last. The whipsaw movement makes this market hard to predict. Though it is clearly trading in a range, the movements are aggressive.
Even though we may not be able to draw adequate lines to articulate either the uptrend or the countertrend, our market is trading in a pennant. We have been creating higher peaks and troughs since our lows back in November, but have recently formed both a lower peak, and two lower troughs, indicating a short-term bearish trend. For now, we assume our market will continue with the broader underlying uptrend, especially if the U.S holds strength, though it is hard to have much conviction.
US Markets
US shares saw a slight rise overnight, with gains across the three major indices. There was little in the way of economic data or company reporting, so instead prices rose with the current bullish momentum. While the Dow notched its second closing record in a row with a small gain, the S&P 500 ultimately finished short of its closing record. There will be plenty of US economic data over the next two sessions, including retail sales tonight and unemployment data tomorrow – these data points will likely determine whether US markets see fresh highs, or whether they see a pullback.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Technology, Materials, and Energy the best performers. Healthcare and Staples stocks saw the most selling.
Technically, the SP500 is currently in the process of a move back to the all-time high resistance at 7,000. Its worth noting that the recent trough was no higher than the previous, which could indicate more of a sideways movement going forward, though we will have to wait and see. Should 7,000 break, we are likely to see more directional gains.
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