The XJO is expected to rally on open this morning following a strong move higher in the U.S overnight. Their futures have edged into the red.
We are expected to open near 7,850 at time of writing, however CBA reported this morning, and the market will likely still be digesting it. Considering CBA is the largest stock on our market, and that it can shift the other major banks too, it is reasonable to suggest that it could easily drag our market one way of the other depending on how its report is received.
It has been a stella run from the lows, particularly in the U.S, considering the heavy selling we saw recently. The U.S is approaching a potential downtrend line and their 50 day MA. Furthermore, they have a CPI reading tonight. Locally, we should open at key resistance at 7,850 and potentially go on to flirt with previous all-time high resistance at 7,900. In essence, there is good cause for this to be the peak of the most recent run. CPI tonight will likely be the decider.
We are in strangle season. Stocks worth pricing up today would be ORG, GMG and TLS for their reports tomorrow, and AMC and ASX for their reports on Friday. If you would like help pricing these positions, please call the office.
US Markets
US shares closed strongly higher overnight with prices rising strongly after the producer price reading, which showed a stronger than expected decline in prices, opening the door for rate cuts beginning in September. Tonight we will see the release of consumer prices (CPI), which is likely to further open the door for rate cuts next month. As long as everything goes to plan, US markets will likely remain moderately positive with this reading. However, should CPI come in stronger than expected, there is big risk of downside movement. Regardless, shares look poised to continue with the overall bullish vibe in the leadup to the expected FED rate cut.
Ten of the eleven sector groups of the SP500 closed higher overnight, with Technology, Discretionary, and Communications stocks the best performers. Most other sectors saw notable gains, with only Energy stocks closing lower after falling producer prices.
Technically, on Friday the SP500 pushed through the potential resistance at 5,400 overnight, which indicates a likelihood of further upwards movement, perhaps to the 5,500 level. Should the index fall from here, the recent lows at 5,200 would be the level to watch.
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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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