The XJO is expected to edge higher on open this morning, with an expected open near 8,580.
The U.S finished marginally in the red overnight. However, they managed to retake some meek intraday losses, indicating they are happy to hold onto their recent move into fresh all-time highs. This is likely contributing to our market’s strong open this morning.
Regardless, our market continues to be unsure, tracking sideward in a range that only seems to be tightening. Yesterday, we gave up all our intraday gains to finish practically flat. This morning on open, we will retest the highs of the past couple of sessions at roughly 8,580. With the U.S holding strength, perhaps we will also hold onto the gains.
Roughly 8,600 remains the key level of resistance that represents our all-time highs and the top of the recent channel. Roughly 8,450 to 8,500 represents the support and bottom of the channel. Indeed, we have skirted along 8,500 for the past few sessions.
It is hard to suggest which way we will break. Considering the lead up to the current channel was firmly bullish, coupled with the renewed strength in the U.S, it seems more likely we break higher and make fresh highs. However, there are plenty of headwinds for markets, and it feels like we are due for some genuine profit taking.
Today we have Retail Sales numbers, which are expected to rebound from last month of (0.1%) to 0.3%.
US Markets
US shares closed mixed overnight with Trump’s terrible budget bill being passed by the US Senate, it will now bounce back to Congress, but is likely to pass from here. The bill will strip healthcare from 10-20 million Americans, and will likely lead to the early deaths of hundreds of thousands. It is also probably the most unpopular bill to ever be passed by the US government – which is saying a lot. Regardless, the bill will provide tax cuts to the wealthy, and so could lead to further funds flows into share markets and that is likely why markets have risen into the bill’s passing. Overnight in a speech from Fed Chair Powell, he stated that the FED would have cut interest rates again by now if not for the Trump tariffs. The next major event for US markets will be US unemployment data on Thursday night. The US economy is definitely slowing and the market is hoping for interest rate cuts, but at the same time, inflation is remaining elevated and that could cause the FED to wait on the rate cuts.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Materials, Healthcare, and Energy the best performers. Technology and Communications stocks saw the most selling.
Technically, the SP500 has recently pushed through the previous all time high resistance at 6,150. With this level breaking, we would expect further upside, though prices are elevated and gains may be smaller from here. 6,150 is now the potential support to watch to the downside.
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