The XJO is expected to open lower this morning following a night of very little movement in the U.S overnight. Their futures have edged into the red, so it seems likely that their market is tentative heading into the Fed meeting tonight.
Our market yesterday bounced intraday from our all-time resistance level, giving up roughly half the opening gains. We too are tentative heading into the Fed decision, and we also have CPI to worry about this morning.
We are at the precipice of a break or rebound. If the U.S can hold strength and news is “good” then our market could quite easily have an upswell of renewed vigour to make fresh highs. However, if the news is average to “bad”, our market will likely rebound from resistance, especially considering we are overdue for a pullback anyway. The first level of support is 7,550, however roughly 7,450 seems like the most reasonable target if we see the rebound.
CPI is expected to come in at 0.8%, down 30% from the previous reading of 1.2% for month on month. If CPI comes in lower that expected, our market may even feel comfortable pushing through today, however it is probably still too hard to fight both the uncertainty in the U.S Fed decision tonight, and their negative futures. Otherwise, if CPI is stronger than expected, our market will likely continue its decent today, with 7,550 as the reasonable intraday target.
US Markets
US shares were mixed overnight, with the NASDAQ closing lower, the DOW JONES closing slightly higher, and with the SP500 closing flat. Three was a lack of major data overnight, so prices instead stalled after the recent strong upwards movement. The NASDAQ moved lower after a report from an influential analyst suggested that iPhone demand in 2024 might be fairly low. After US markets closed, Google and Microsoft reported apparently disappointing results, with both trading notably lower in after market trading. The real test for US markets will come tonight/tomorrow morning however, with the Federal Reserve meeting for January. Markets have jumped on the hope of Fed rate cuts as early as March, so we will need to watch this meeting closely for guidance on rate cut likelihood moving forwards.
Six of the eleven sector groups of the SP500 closed higher overnight, with Financials and Energy stocks the strongest performers. Communications, Technology, and Real Estate stocks saw the most selling.
The SP500 stalled overnight, with the index topping out just above 4,900 index points. We will need to see what happens with US markets tonight, with their Federal Reserve meeting. Should the meeting trigger selling, we could see a reversal in US markets, with the first downside target likely the previous resistance at 4,800 index points. Should we see further buying, its hard to say where the move could end, but the round number of 5,000 will undoubtedly be a candidate.
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Advisor at TradersCircle and Emerald Financial
Joining the team at TradersCircle in 2011, Karo has extensive experience in both investing education and derivatives trading.
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