The XJO is expected to edge higher on open this morning following a similar move in the U.S overnight and their flat futures this morning.
It felt like our market was dragged higher kicking and screaming yesterday by positive U.S futures which heralded a stronger night than what ended up being delivered. They managed to hold their 50 day MA, where as we are trading at a slight discount. It seems likely markets are unsure leading into the Fed interested rate decision Wednesday night. We shouldn’t expect much between now and then as we wait for an update on the future guidance of monetary policy.
7,550 seems to be the support our market wants to hold, and 7,650 to 7,700 is the resistance. We should expect continued consolidation before the announcement.
US Markets
US shares closed flat to slightly higher overnight, with prices trading lower at points before rallying late to close around the high of the day. There wasn’t a whole lot of economic news or events from the US overnight, so instead prices drifted around current levels. The main concern for US (and global) investors remains the likelihood of rate cuts moving forwards. We will get an update on this front on Wednesday night, with the Federal Reserve May meeting. Investors will be looking for clues as to the likelihood of rate cuts this year, and whether another rate rise is a possibility. The US company earnings reporting season will also restart in earnest tonight, which could trigger some stock or sector specific movement.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Discretionary, Utilities, and Real Estate the strongest performers. Communications were the worst performers overnight.
Over the past few sessions the SP500 has seemingly bounced from the support around 4,950-5,000 index points. Bouncing back towards the downtrend line, which roughly sits at the overnight close. Should the index head any higher, that would be breaking that downtrend and we could expect a move to the next major support/resistance around 5,150. Should we see selling from here, 4,950-5,000 would be the first downside target.
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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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