The XJO is expected to open lower this morning.
The U.S closed slightly higher overnight, retracing from their intraday lows as they continue to consolidate sideward. Whilst the U.S has tracked sideward over the past few sessions however, our market has maintained its strength, pushing towards our all-time highs. This morning’s pullback is likely to due us simply falling back in line with the U.S, as well as observing their negative futures alongside those of key Asian markets. Also, wholistically, our market is quite expensive, and is clearly due for a pullback in the short-term.
We should open near 8,030. The next key support is roughly 8,000. There has been a short-term uptrend line with a steep gradient in play ever since this run started back at the start of the month. This morning’s move lower should break that uptrend line and potentially complete an evening star reversal pattern. Coupled with a clear rebound off key all-time high resistance, technically our market will be showing clear (albeit potentially early) signs of a pullback.
We will of course follow the U.S, and if they maintain strength, it seems reasonable to suggest that we will too. Sentiment underpinning markets clearly remains firmly bullish and the absence of key news, markets have felt comfortable holding ground if not rising. There are cracks beginning to show, of course, which comes with the territory of a strong market. Despite the sentiment, some mean reversion and profit taking seems due in the short-term.
US Markets
US shares closed slightly higher overnight, with little movement across the three major indices. Movements were small with investors seemingly taking pause ahead of some key events for the next few days. Perhaps the most important event of the week will occur tonight with NVIDIA’s earnings report. Much of the buying this year has been justified by analysts suggesting AI will dramatically increase company profitability. Tonight will go some way towards confirming whether those analysts are correct. A better than expected result will likely lift sharemarkets around the world. A worse than expected result will likely trigger broad-based selling. Tomorrow night we will see US GDP, and Friday night will see some key PCE data as well. With all this going on, things could look quite different by the end of this week.
Six of the eleven sector groups of the SP500 closed higher overnight, with Technology and Financials stocks the best performers. Energy stocks saw the most selling as oil prices dropped after spiking the day before. Most sectors were fairly flat.
Technically, despite some strength over the past few sessions, the SP500 has been unable to exceed the high of Thursday last week. The index does remain on an upwards movement, but it will first need to exceed that level at roughly 5,635 before further gains will look likely. Should we see the market rise beyond this level, the next level, the all-time high resistance is not too far away at 5,670. Should we see a bearish candlestick from here, that could indicate a move lower.
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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.
Latest posts by Karo Cornips (see all)
- XJO to open flat with US markets back around resistance - September 2, 2024
- US markets close lower ahead of NVIDIA report, which disappoints - August 29, 2024
- Investors take pause ahead of key NVIDIA report - August 28, 2024
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