The XJO is expected to edge higher on open this morning despite a small pullback in the U.S overnight. Their futures this morning are pointing higher, likely giving our market some confidence to extend the past couple of sessions’ meek gains.
We continue to trade in the short descending channel that could be part of a flag pattern. If we can break higher then 7,100 is the first stop, but we could even expect a move to 7,200 to 7,300 eventually. Of course, regardless of our own technical patterns, we would need to see the U.S hold strength for this to eventuate.
For now, we should expect things to continue sideward, however there will be a break out one way or another soon.
US shares closed fairly flat overnight, with markets trading a little nervously after US third quarter GDP was revised higher. Despite this, US government bond yields continued to fall, which may have come after comments from respected hedge fund manager Bill Ackman on his belief the Federal Reserve will have to cut rates more quickly than people expect. Prices did trade firmly higher at points overnight, but they pulled bac to close around opening levels. At this point, US markets have been drifting sideways for over a week now, so we re just waiting to see which way they break.
Six of the eleven sector groups of the SP500 closed higher overnight, with Real Estate and Financials stocks the strongest performers. Energy and Communications stocks saw the most selling.
Technically, the SP500 almost reached the yearly high resistance at 4,600 overnight before pulling back to close at the key level of 4,550 index points. The index has struggled to draw itself away from this level for the past week, should it rise from here, 4,600 is likely to act as resistance. Should it fall from here, we would expect an eventual higher trough for the index.
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