The XJO is expected to edge lower on open this morning, near 9,175 at time of writing. The U.S also closed lower on Friday night, though they managed to retake roughly half their intraday. Their futures also closed in the red.
Regardless, our market seems to be largely running its own race. Despite the horrible CPI numbers last week, our market rallied into fresh all-time highs. Despite U.S futures firmly in the red during our session on Friday, our market held those gains, and finished marginally in the green. It will be interesting to see if our market’s almost blind courage can hold once the futures open back up this morning.
It seems every week there is something new happening. This weekend, Israel and America attacked Iran. Iran responded by attacking U.S army bases in various local nations. The last time Israel and the U.S attacked Iran, it didn’t last too long. This time, it may be different – it is hard to speculate.
9,200 seems to now be all-time high key resistance, we have stalled twice and our red open will help confirm it. However, our market has been uncharacteristically and confusingly bullish despite the current climate. Perhaps this selling will be short-lived – though it seems the least likely outcome for now.
The previous all-time high at roughly 9,100 to 9,125 is the next clear support, though it hasn’t been tested as a support yet. Beyond that, 9,000 is the next clear level. Our market looks quite overbought in the short-term. Our 50 day MA comes in at roughly 8,870 at time of writing, about four per cent away. It is not typical for our market to move much higher than four per cent away from the 50 day MA before having a decent retracement. Coupled with the negative news, and how overheated things look in the short-term, the expected selling today should hold.
Trading the technicals seems to be the most effective way of looking at this market. Despite all the negativity, our market continues to trade the trend higher. We can only assume it will continue to do so and stick to technical principles – albeit with much caution.
Key macro-economic data remains important. In the week ahead we have U.S PMI data tonight and Wednesday night. Local GDP data Wednesday. And U.S employment figures Friday night – though any effect won’t be felt until Monday for us.
Our advisor score has changed from 65 to 55.
US Markets
US shares closed lower on Friday night, with technology and financials stocks seeing strong selling and dragging US markets lower. This was before the attacks on Iran over the weekend, and with the attacks and retaliation, and with Iran closing the straights of Hormuz (where almost a third of the world’s oil travels), we would expect some more selling. As is Trump’s tradition, he waited until after markets had closed on the Friday to minimise the impact on share prices. Its hard to know what will happen on reopen tonight but for now we must assume selling and a potential break of support on the SP500.
Nine of the eleven sector groups of the SP500 actually closed higher on Friday, though this was before the attacks on Iran. Healthcare and Energy stocks were the best performers. Financials and Technology stocks saw the most selling and dragged markets lower.
Technically, the S&P500 has been holding above the support level at 6,800. With the index now potentially in a channel between this support and the all-time high at 7,000. With the attacks on Iran over the weekend we will now need to wait to see if 6,800 holds as support. Should 6,800 break, we would expect further selling. Should the market hold and bounce from 6,800, we would expect an eventual return to 7,000. We would need to see a break above 7,000 for more gains to look likely.
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