The XJO is expected to open higher this morning following a strong rally in the U.S overnight. Their futures are flat this morning.
The U.S has obviously interpreted the news surrounding next year’s guidance on monetary policy extraordinary well and their positivity should directly flow into our market. We should open near 7,350 resistance, but it is hard to suggest we will push through that level today. U.S futures are flat and if they remain so or dip in the red during our session today, expect most, if not all, our gains to happen on open.
Despite the positivity underpinning markets at the moment, the U.S and our market are looking very overbought in the short-term. It would be hard not to expect some profit taking soon, however knowing exactly when is tough to predict. The U.S is very close to their all-time highs, and it seems like they are hellbent on getting there. This could translate to a move back to 7,400 to 7,450 in our market before we see any serious pullback.
7,200 remains the next support and 7,150 beyond that, which is also where the 200 day MA comes in.
US shares jumped strongly higher overnight after the Federal Reserve meeting. The Fed kept interest rates unchanged, which was expected by markets, but their ‘dot-plot’ of forward rate expectations showed that Fed members see three rate cuts in 2024, something that is extremely bullish for bonds and shares. Shares have pretty much gotten everything they could ask for across the past month, with a clear peak in interest rates, inflation coming under control, and a soft economic landing looking possible. It is entirely possible that we see this rally in shares continue for a little while yet. Two things could threaten the situation fundamentally, which are inflation re-emerging, or economic data weakening substantially.
Every major sector of the SP500 closed higher overnight, with Utilities, Real Estate, and Healthcare the strongest performers. Every other major sector closed firmly in the green.
Technically, the SP500 is still showing bullish signals and has clearly broken above the key 4,600 resistance level, which was the highest level for the year. Its hard to say where the upwards movement might end but the all-time high of 4,800 could be an upside target.
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