The XJO is expected to rally on open this morning following a rebound overnight in the U.S. Their futures are flat this morning.

Recently we have been leading the U.S. Yesterday we rebounded from key support at roughly 7,700, and roughly where the uptrend line comes in. The U.S overnight followed suit.

GDP data came in slightly stronger than expected on a year-on-year basis, but came in as expected at 0.2% growth on last month. Furthermore, retail sales rebounded from being negative 2.7%, to 1.1% in the green compared to last month.

It seems we are seeing a transition to good news being good again. Our market alongside the U.S have largely been seeing sticky if not stronger than expected macro data this year and indexes keep moving higher. Even though the previous narrative was that it would be pushing interest rates out, and thus bad for markets, it could be that staving off recession is more important right now for markets.

Either that, or markets are simply ignoring the data and trading higher on momentum. In other words, the music has stopped playing, but everyone is still dancing.

Technically, we are set to rebound off the uptrend line today. There are about 30 points of dividends that will come out of our market, which means we are likely to see only a small move higher this morning. Markets remain difficult to trade as short-term indicators put many of our stock in overbought territory, and others are consolidating.

US Markets

US shares closed moderately higher overnight with prices rising after comments from Fed Chair Jerome Powell, testifying in front of Congress, where he stated his belief that the US is headed towards a soft economic landing and that the Fed will pivot towards a rate cut at some point this year. Powell will testify further tonight. Other US economic data continued to look positive overnight, with greater than expected job openings, a drawdown in US oil inventories, and stronger than expected labour productivity. Other than Powell’s further testimony tonight, the next major event for US markets will be their unemployment report on Friday, followed by their very important February CPI number next week. Despite the apparent positivity overnight, it is worth noting that US markets reversed from their highs of the day to close around opening levels.

Nine of the eleven sector groups of the SP500 closed higher overnight, with Utilities, Technology, Staples, and Materials stocks the strongest performers. Discretionary and Communications stocks closed lower.

Technically, the SP500 is holding above a longer-term uptrend line that has formed since October. The index may be showing an evening star candlestick reversal signal up the top of the range here, but it would have to close below the uptrend line (currently sitting around 5,050) to confirm this bearish reversal pattern. Overnight the index struggled to close above 5,100, which was previously the all-time high. Should the index continue to bounce from the trend line, the recent peak around 5,130 would be the upside target.

Want to learn how to trade?

The team at TradersCircle/Emerald Financial have released a free online stock market education course, click here to enrol and get started.