The XJO is expected to open flat this morning following a marginally higher finish for the U.S last night. Their futures have edged into the red which is likely contributing to our muted open.

Yesterday we managed to break through 7,280 key resistance convincingly. We had been skirting alongside it for the past couple of days. The next key level remains at roughly 7,370 which marks the top of the channel and the highs of our market for the past several months. It seems unlikely we reach it today unless U.S futures do a turnaround during our session.

At this stage it looks like it will be a quiet day as we consolidate and see whether the U.S can keep moving higher. Both our market and their market look relatively overbought and due for some profit taking. Whether this occurs before we reach the top of the channel however is hard to know.

US Markets

US shares closed flat to higher overnight, with minor gains across the three major indices. US economic data was mostly negative, with fewer building permit and housing starts than expected. There was also a smaller than expected drawdown in US oil inventories. Overall, though the data was negative, it does point to a continued slowdown in inflation, which is still what the market wants to see. Overnight also saw British and European CPI data announced. British CPI was lower than expected, sending their listed stocks higher, while Core European CPI was higher than expected, and most European markets finished flat to lower. US shares were initially higher with these news items, but selling crept in and shares finished fairly flat. On the earnings front, both Tesla and Netflix fell strongly in aftermarket trading after disappointing results.

Eight of the eleven sector groups of the SP500 closed higher overnight, with Real Estate and Utilities the strongest performers. Materials stocks fared worst overnight. Most sectors were relatively flat.

Technically the SP500 is continuing on its uptrend and now the next potential resistance level is some way away at the 4,600 level. This level hasn’t been reached in over a year, so its hard to say whether this will be the resistance level or not. Should the index fall from here, recent resistance at 4,450 may now act as support.

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