The XJO is expected to open higher this morning following a flat night in the U.S. Their futures are also flat.
Yesterday there was a moment where the market panicked, falling about 1.5%. The U.S had hardly fallen the previous night but our market is clearly not needing much of an excuse to sell down. Come close though, we had managed to retake roughly half the intraday losses to finish at roughly 8,200 support. This morning we will have a slight rebound.
We also finished at the 50 day MA, a point of comfort for our market. We should continue to expect our market to hold around here whilst we wait for the U.S to give clearer direction. There is a key level of resistance every 50 points from here to our all-time highs at roughly 8,350 resistance. 8,100 remains key support, and roughly represents the bottom of the recent range.
Finally, we may be seeing a broad head and shoulders reversal pattern playing out. 8,100 is the neckline. If it is broken in any convincing measure, our market should head back to roughly 8,000 to 7,950 – but we shouldn’t put too much stock in this just yet.
Today we have local unemployment data. We are expected to remain at 4.1% – practically full employment. This remains a bearish pressure for our market as the RBA wants to see key macro indicators like unemployment worsen to help reduce inflation.
US Markets
US markets managed to edge out a small gain overnight, with the DOW JONES and SP500 seeing slight gains, while the NASDAQ closed slightly lower. The moves came after US CPI (inflation) for October came in in-line with expectations, which was basically the same growth as September. It was a fairly flat, yet back-and-forth session overnight, with prices trading a little higher and lower at points. Prices do look quite elevated at the current level, but with the momentum firmly bullish, it will likely take some sort of negative event to send prices lower. The overnight CPI wasn’t a great reading (with inflation no longer falling), but it wasn’t enough to change the market’s mind on the likelihood of rate cuts moving forwards.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Discretionary and Energy stocks the strongest performers. Communications stocks saw the most selling. Most sectors were fairly flat.
Techically, the SP500 has been unable to push above a potential resistance around the 6,000 point level. Should the index fall in the coming sessions, it could fall back to the previous all-time high at roughly 5,880, which may act as support. Should the index rise through 6,000, that would indicate further gains.
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