RBA day and US markets show a reversal signal

The XJO is expected to edge lower on open this morning following a late sell off in the U.S last night that saw them shed all their intraday gains to finish slightly in the red. Their futures have also edged into the red.

Our market yesterday pulled back from resistance, almost as if anticipating that the U.S would hold their key resistance. It is more likely however that we were simply being cautious as we head into key announcements this week like our interest rate decision from the RBA today at 2:30 today, and the U.S Fed’s interest rate decision on Thursday morning. It makes sense that we don’t want to break the consolidation range until the dust settles and we have a better idea as to how the U.S trades.

Key resistance remains roughly 7,350 to 7,400, and key support remains roughly 7,300 to 7,275.

US Markets

US shares closed slightly lower overnight, with prices initially trading higher before pulling back into the red by the close. US markets were a bit shaken after regulators took control of First Republic Bank and sold it to JPMorgan Chase. This is the latest in a series of banking failures in the US, which is degrading the sentiment of investors. Still, markets remain near their highs, with prices being held up by strong earnings reports from the large US tech stocks. Apple will be the next of the tech major’s to report, and bulls are hoping that it will continue the optimism built from the strong reports of Alphabet, Meta, and Microsoft. This week will also see a focus on monetary policy, with the US Federal Reserve delivering an interest rate decision on Wednesday night. Markets are convinced we will see one final rate rise at this meeting, and the event is likely to trigger directional movement.

Six of the eleven sector groups of the SP500 closed lower overnight, with only Healthcare and Industrials making notable gains. Energy stocks were the worst performers after oil fell back off, while Discretionary and Real Estate stocks also fared poorly.

The SP500 initially broke above the key 4,160 resistance level before reversing to close back below this key level. The index is now showing a bearish reversal doji at this level, suggesting we could see a move back to the recent support around 4,070. Should we push back up and break above 4,160 however, we will likely see the index continue higher to 4,200.

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