The XJO is expected to edge higher on open this morning following a small intraday recovery from the U.S overnight which saw their market finish marginally in the green. Their futures are flat.
Our market continues to trade at the point of the pennant pattern. Yesterday we rebounded off the underlying uptrend line and managed to finish slightly in the green. This morning, we should test the countertrend line. There is little room left to the point, so we should expect a break soon. However, with the low volatility and indecisive moves that have underpinned our market recently, it is hard to expect the break not to fizzle.
If the countertrend line breaks, then roughly 7,700 remains the next key resistance. If the underlying uptrend line breaks, then roughly 7,550 to 7,580 is the next key support.
US Markets
US shares closed relatively flat overnight, with the SP500 and NASDAQ finishing slightly in the green, while the DOW JONES finished slightly in the red. US economic data overnight was mixed, with lower than expected consumer confidence and durable goods orders, while the Atlanta Fed GDP forecast came in higher than expected. Overall the data doesn’t really tell us too much, and instead the major US events of this week are being released in the coming two sessions. These are the 4Q GDP revised numbers, which will be released tonight, and the PCE price index, which will be released tomorrow night. The PCE data is perhaps the most important of these, as according to the Federal Reserve, this is their preferred measure of inflation.
Eight of the eleven sector groups of the SP500 closed higher overnight, with Utilities the strongest performers, followed by Communications stocks. Energy stocks saw the most selling, with most other sectors fairly flat.
The SP500 reached a milestone intra-day high of 5,100 on Friday. However, the index may have subsequently shown a candlestick reversal pattern up the top of the range, which could suggest a pullback back towards the longer-term uptrend line and the potential support level at 5,000. Should the index reverse and push higher, it would need to break above 5,100 for further gains to look likely.
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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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