The XJO is expected to open flat this morning following both a similar move from the U.S last night and their flat futures this morning.
As the U.S trades in the point of their ascending triangle, our market seems unwilling to break our own in any convincing manner. A couple of days ago we tried to stick our head above the key resistance but yesterday we came straight back inside. Furthermore, we also edged below the uptrend line. It seems that at this stage there isn’t much room left inside the point of the triangle and we will simply break it with meek sideward movement as we wait for the further direction from the U.S.
US Markets
US shares closed flat overnight, with little change across the three major indices. There was a lack of major economic data, so the focus was instead company earnings reporting, with overnight results coming in a bit more mixed after mostly positive reports last week. Johnson & Johnson and Goldman Sachs each saw selling after their reports overnight, while Bank of America and Lockheed Martin each rose on the back of their reports. After market we saw a report from Netflix, who missed on the subscriber count expectation, though they only saw moderate selling in after market trading. In general the earnings season has been mostly positive so far, which is helping US markets to maintain near recent highs. Tonight major names include Tesla, IBM, and Morgan Stanley, will announce results. This week there is a lack of major US economic data, so the strength of reporting will likely influence market movements.
Seven of the eleven sector groups of the SP500 closed higher overnight, with no sector achieving more than modest gains. Selling was also fairly subdued, with small moves lower in Healthcare and Communications stocks.
The S&P500 remains on 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.
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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