The XJO is expected to edge higher on open this morning following a continued rally in the U.S overnight which saw their market close firmly once again in fresh all-time highs. Their futures have dipped into the red.
Over the past couple of sessions, we have been testing key all-time highs resistance at roughly 8,600 to 8,625. Yesterday we opened near 8,630 and pulled back for most of the morning session. However, by close we had managed to retake most of the intraday losses to finish practically flat. It is clear our market is fighting temptation to rally alongside the U.S and join them in fresh all-time highs.
This morning, we should once again open at roughly 8,630, testing both the highs of the past couple of sessions, and continuing our flirtation with the all-time high resistance. Considering the strong move in the U.S overnight, there is a good chance our market pushes through and holds the gains.
However, the U.S is closed tonight (some holiday about an alien invasion?) so our market may not feel comfortable making too much headway without further leads. Furthermore, the weekend can have many surprises.
We should continue to assume our market will continue to track sidewards to higher. The technicals have remained sturdy and reliable for most of this year and continue to do so despite the reality of the current macro environment. In the short-term, assume the resistance will hold until we see otherwise as the most dominant pattern remains the channel. The uptrend has a greater presence in the medium term.
US Markets
US shares jumped overnight with fresh all-time highs reached for the SP500. US shares rose with the unemployment report for June coming in mostly better than expected, with more jobs created than expected, and with a lower unemployment rate. Funnily enough, fewer private jobs were created than expected, meaning that a large increase in government jobs made up the difference. Wages were also lower than expected, which is bad for Americans, but potentially means greater likelihood of rate cuts. Elsewhere, the US congress passed Trump’s terrible budget bill, which again is probably good for the market in the short-term (as it has large tax cuts for the wealthy) but longer-term it will increase the US government debt quite significantly. Additionally, it will strip healthcare coverage from more than 10 million US citizens and it will likely lead to the preventable deaths of hundreds of thousands of people. It would be comical how evil this is, if it wasn’t happening in real life.
Ten of the eleven sector groups of the SP500 closed higher overnight, with Technology, Financials, and Industrials the best performers. Most sectors saw modest buying, with only Materials closing (very) slightly lower on average.
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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