The XJO is expected to open flat this morning following another lacklustre night of trading in the U.S which saw their market finish marginally lower. Their futures are also flat.

Yesterday we pulled back, helped largely by negative U.S futures that heralded a stronger pullback than what was actually produced last night. We may feel comfortable retaking some of the losses this today, provided U.S futures don’t spook us again. If we can turn around here, then we will have the beginnings of another higher trough which will add credence to the argument that our market has changed trend and is trading in an uptrend. We also may be seeing a flag pattern forming. If we can break the very short-term downtrend line that has formed over the past week or two, then it is a strong sign of bullish movement up to 7,250 to 7,300.

This may be wishful thinking with a U.S that is tracking sideward after gaining just over ten per cent in such a short period. They seem due for some profit taking, however, knowing their market they could easily doggy-leg up and make fresh highs before we see any real pullback. This may be what our market needs to make its own gains.

Regardless, we are just keeping an eye on things and waiting for some movement.

US Markets

US shares closed lower overnight, though movements were small. Overall the massive rally that has been seen throughout November seems to have lost steam across the past week. Some profit taking shouldn’t be unexpected after such extreme strength, but things otherwise are looking fairly positive for US markets, with inflation coming down, interest rates peaking, and with most economists expecting a soft economic landing in the expected 2024 downturn. There isn’t a whole lot of US economic data until GDP on Thursday, so we could see further sideways movement for a couple of sessions.

Four of the eleven sector groups of the SP500 closed higher overnight, with Real Estate the strongest performer. Industrials and Utilities stocks saw the most selling.

Technically, the SP500 is on a super-strong short-term uptrend but it may be starting to find some resistance at roughly 4,550 index points. Overall, the index looks likely to continue higher to the yearly high resistance at the 4,600 level. However, a small breather could be seen first, should this occur, the first downside target would be the 4,520 level.

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