The XJO is expected to edge higher on open once again following renewed buying in the U.S overnight.
Yesterday we managed to break through resistance at roughly 8,550, held onto our gains, and set our highest close ever at 8,587. Our market has traded higher intraday before, at 8,615, but never closed above where we closed yesterday. It looks like this morning we will be testing 8,615 and potentially setting new highs.
U.S futures are in the red. If they sell off further during our session, it seems reasonable that our market would give up intraday gains and not commit to making fresh all-time highs. Furthermore, our market very rarely likes making consecutive all-time highs. Often, it will sell down the very next day, or within a handful of days of consolidation, and we should expect the same soon.
8,550 to 8,500 is now support, having been cleared as resistance recently. The underlying uptrend line comes in at similar levels. Any mild pullbacks are likely to pause there. Furthermore, the stochastic remain well in the overbought period and will want a chance to normalise. However, the market has not had any decent selling since the rally began back in April, so we are likely well overdue. What will trigger a fall is hard to know, and it may be a while yet before we see one, considering how jazzed up our market is on the prospect of more rate cuts.
The U.S has CPI data tonight, which could easily shift their market, and by extension ours. It is arguably the most important dataset for the U.S market as it is the Fed’s primary concern when deciding the future of monetary policy.
US Markets
US shares closed higher again overnight, with share rising after a techical break higher on Friday. There was a lack of major news or events overnight, but the next big data test will come tonight, with US inflation data for May, which is expected to show inflation starting to rise again, with the tariffs working to push prices higher. Lower than expected inflation could trigger a push to the all-time high, while a stronger inflation number will likely trigger selling. US and Chinese trade officials are also meeting in London at the moment and markets will likely move in response to any announcement from this event.
Ten of the eleven sector groups of the SP500 closed higher overnight, with Energy, Discretionary, and Healthcare the best performers. Only Industrials closed lower.
Technically, the SP500 has pushed through two resistance levels at roughly 5,975 and 6,000. With these levels breaking, from a technical perspective, further gains to look likely. The next major level to the upside is the all-time high at roughly 6,120. Should the index break its uptrend line, that is where we could see more selling.
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