The XJO is expected to open flat this morning following both a lackluster night of trading in the U.S and their flat futures this morning.

It seems markets at this stage are waiting to for the CPI reading tomorrow night from the U.S. Before then it would be hard to expect too movement either way.

The U.S remains within arm’s reach of their all-time highs, but seems unlikely to commit any further. Our market on the other hand has found safety and comfort skirting along our 50 day MA. We could also be trading in a pennant pattern, which we are likely to break out of once we see how the U.S reacts on Wednesday night.

US Markets

US shares closed slightly lower overnight, with a small downwards move across the three major indices. US markets appear to be treading water just below the all-time highs as they await Wednesday night’s key CPI reading. The market is looking for any signal that rates could be cut this year, and after stronger CPI readings in January, February, and March, many are hoping April’s number will be the turning point for inflation. Expectations are that CPI falls from here and should that be the case, it could herald US rate cuts in September. Should Wednesday’s CPI come in lower than expected, we are likely to see US markets reach fresh all-time highs, while another stronger than expected reading will probably send markets strongly lower.

Only two of the eleven sector groups of the SP500 closed higher overnight, with Technology stocks the strongest performers. Industrial stocks saw the most selling, followed by Financials stocks.

Technically, the SP500 is trading just below the all-time high resistance, with the market perhaps stalling at the level just below, roughly 5,200-5,220. Should the index rise any further, we would quickly see a move to the all-time high resistance, which would have to break for subsequent gains to look likely. Should the index fall from here, we would be seeing a lower peak, which would potential signal further selling.

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