The XJO is expected to open flat once again this morning. The U.S is tracking sideward with the last four sessions looking very similar – intraday losses have been bought up by the bulls to finish flat. This has given our market very little indication as to which move may be next.
Yesterday marked the fifth day in a row of little to no movement. The short-term downtrend line remains in play, but continued sideward movement will break it – though not with a bang, but with a whimper.
Perhaps some key economic reporting from the U.S will finally bring some volatility. The XVI and VIX have gone to bed. Usually it is the bears that wake them up, but a break either way should do it.
US Markets
US shares closed modestly higher overnight, with each of the three major indices finishing in the green. It was a mostly unremarkable session, with markets rising on some suggestion from three Fed officials that interest rates would remain on hold at the next meeting, while a fourth stated that it was still data dependant. Tonight we will see the release of US retail sales and industrial production, which could shape the narrative around the likelihood of more rate rises, as well as the likelihood of a hard or soft landing. While markets are happy to see the economy contract slowly from here, they don’t wont to see signs of a severe economic downturn.
Five of the eleven sector groups of the SP500 closed lower overnight, with Utilities the worst performers. Financials and Materials stocks saw the strongest buying as they rebounded from last week’s selling.
The SP500 remains in no man’s land, sticking to the current range for some time. This is above the 4,050 as a support level, but below the 4,170-resistance level. Its not at all clear which way the market wants to break, but should the 4,170 level break, the next upside target is very close by at the 4,200 resistance level. Should 4,050 break to the downside, the next target would be the 4,000 point level.
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Sam Green is the Portfolio Manager at Emerald Financial, whilst also being an Equities and Derivatives expert for his clients at TradersCircle.
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