The XJO is expected to open lower this morning following both a pull back in the U.S overnight and their negative futures this morning.
The U.S market managed to retake some of their intraday lows to finish roughly where they opened, but with their market beginning to show cracks, we will retreat and revaluate today.
We should move straight back to roughly 7,300 this morning. This marks a bit of a floor in the recent consolidation range. The uptrend line has certainly broken, and with us griding sideward along these key levels, it is hard to say where the next move for our market is. There is no clear defined trend in the short-term, except echoes of the recent strong run we have had.
Ultimately, a pullback is in on the books today, but how we break this consolidation with once again come down to how the U.S moves.
US Markets
US shares closed mostly lower overnight, with weakness in company earnings reporting, particularly from large-cap carmaker TESLA, as well as with strong selling in AT&T after its report, both of these sent the major indices lower. US economic data was also mostly negative overnight, with worse than expected Jobless Claims, Home Sales, and Manufacturing data. In general, US markets are looking toppy after recent strength, though strong company earnings are working to help keep US markets at the highs.
Ten of the eleven sector groups of the SP500 closed lower overnight, with only discretionary and Real Estate stocks closing notably lower.
The S&P500 is currently testing its medium-term uptrend line, and the index continues to looks cautiously bullish. With the index continuing to hold the trendline, it looks likely to continue higher to the next major resistance level of 4,200. Should the index fall from here, it will have to break the uptrend line, then the support at 4,075, before it will look like falling further.
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Sam Green is the Portfolio Manager at Emerald Financial, whilst also being an Equities and Derivatives expert for his clients at TradersCircle.
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