The XJO is expected to edge higher on open this morning despite a small pullback in the U.S overnight. Their futures have also edged into the red.

The sidewards consolidation continues as we track around 6,950. Key support remains 7,550, and key resistance remains roughly 7,700. It seems markets are quiet heading into the CPI reading in the U.S tonight.

US Markets

US shares closed mixed overnight, with the SP500 and NASDAQ closing lower, while the DOW JONES closed higher. There was a lack of major US economic data and movements were fairly flat, which shouldn’t be too surprising ahead of tonight’s very important CPI reading. Tonight we will see US CPI for January, which will determine the likelihood and timing of rate cuts moving forwards. Overall, US rate cut expectations have been pushed further and further out, which could have been expected to trigger some selling in the market, though this hasn’t materialised.

Seven of the eleven sector groups of the SP500 closed higher overnight, with Utilities, Energy, and Materials stocks the strongest performers. Technology stocks saw the most selling.

Technically, the SP500 broke above the 5,000 level on Friday, closing well above that potential level of resistance. Its hard to say where this move may stall, but fundamental and technical indicators do suggest that the market is heavily overbought. This doesn’t mean that it will immediately fall from here however, and it could end up reversing from a higher point. Currently the first downside target would be the previous resistance at 4,800.

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