The XJO is expected to edge lower on open this morning following a small pullback in the U.S overnight. Their futures have moved into the red.

Ever since the breakout recently, our index has been pretty much copied the overnight moves from the U.S. Their futures during our sessions have not done much, and therefore haven’t caused the XJO to trade differently to what the SP500 did the previous evenings. This morning their futures are down a bit more than usual, but if they don’t move much lower, we should once again have a similar move to overnight session in the U.S.

Yesterday the market bounced off both the previous all-time high resistance at 7,900 – now support, and the uptrend line that has been in play since roughly the start of the month. The next key resistance is roughly 8,050 to 8,100. The short-term stochastic have started to normalise, indicating that the market is comfortable here for the moment as it consolidates.

The market does look bullish back to resistance, but things may remain quiet leading into the GDP reading tomorrow night. Regardless, it is hard to be bearish in this market (despite what common sense may argue).

US Markets

US shares saw minor selling overnight, with prices initially trading higher before pulling back to close below yesterday’s finishing level. After US markets closed their futures did see some selling due to a disappointing earnings result from Tesla and a middling earnings report from Google, both reported after market. US markets seem to have stalled across the past few sessions, but they are still in an extremely bullish market overall. US investors have had everything they could ask for, but prices are extremely high, some profit taking at points is healthy and should be expected. The current spate of earnings will also have to be very positive to justify the current high prices.

Three of the eleven sector groups of the SP500 closed higher overnight, with Materials the strongest (although not that strong) performers. Energy stocks saw the most selling, followed by Utilities stocks. Most sectors were flat.

Technically, the SP500 bounced off the support level around 5,500 (the previous all-time high resistance). Given the hold of this level, we will likely see a continuation of the trend and potentially even a higher peak. To the upside, the all-time high at 5,670 is now the level to watch. Should the market fall from here and break below 5,500, we could see a move all the way back towards 5,250.

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