The XJO is expected to open flat this morning following another tumultuous night of trading in the U.S on Friday which saw their market finish slightly lower by close. Their futures have moved into the red however, and if they remain so during our session today, it will be hard for our market to remain flat.
For most of last week our market has tracked sideward alongside the U.S. We have grinded along 7,250, with the days trading range relatively meek and uneventful. The next key support is down at 7,200, which is also where the 50 day MA comes in. Beyond that, 7150 and then 7,100 where the 200 day MA comes in are the next levels to watch for. Roughly 7,300 remains the next level of resistance, with 7,350 and 7,400 the next targets after that. There also looks to be a short-term downtrend line that started in mid-April and has been in effect since.
It is hard to know when this market will break consolidation, or what will cause the break – but we will almost certainly need to see the U.S make headway first. There is some key economic data coming out this week locally and in the U.S which will hopefully shake things up.
US Markets
US shares closed mostly lower on Friday, with each of the three major indices seeing slightly losses. Prices again traded back and forth and largely kept inside the range of the past week’s trading sessions. For the time being, it seems nothing will shift US markets either higher or lower, as they have remained in a very narrow range despite a raft of potentially volatile news items. This week also has some big news items, with US retail sales and industrial on Tuesday night, followed by a series of Federal Reserve member speeches on Wednesday. In general, US shares continue to look a bit overbought considering that the rate hike cycle and peak rates keep being pushed out, so do be wary for downside movement if key supports break.
Seven of the eleven sector groups of the SP500 closed higher on Friday, though none of them managed strong gains. Of the sectors to close lower, only Consumer Discretionary stocks saw notable selling.
The SP500 remains in no man’s land, above the 4,050 as a support level, but below the 4,170-resistance level. Its not at all clear which way the market wants to break, but should the 4,170 level break, the next upside target is very close by at the 4,200 resistance level. Should 4,050 break to the downside, the next target would be the 4,000 point level.
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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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