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

We should open near 7,775 and with green U.S futures we should push further. Due to our market tracking sideward in tight range for much of this year, there is practically key levels of resistance every 50 points until we reach our recent highs. Our high volatility means we will ignore some and listen to others – knowing which is difficult. 7,850 does represent a very level though, and if buying persists is a solid target for our market. This is also where the 50 day MA roughly comes in, which should act as a point of optimistic comfort for our market as we await further direction from the U.S.

Our reporting season will be in full swing next week. The big news however will likely be U.S CPI Wednesday night, and local employment numbers on Thursday. Coupled with some major reports from the likes of CBA, and CSL we should expect volatility to remain.

US Markets

US shares rebounded strongly overnight, with strong buying across all three major indices. The gains came after fresh US jobless claims came in lower than expected, assuaging some fears that the economy is headed to recession. Though US markets rose, the struggled to push past the highs of the past few sessions, with this technical resistance now the mark to beat for further gains to look likely. US investors seem happy to again believe in a soft-landing to the current economic tightening but this view does risk disruption should negative economic data be released. Still, the prospect of rate cuts in September remains a carrot dangling in front of the market.

All eleven sector groups of the SP500 closed higher overnight, with Technology the best performer, followed by Communication stocks. Every other sector saw notable gains except for Utilities, which was only modestly higher.

Technically, despite the overnight gains, the SP500 again held below the potential key levels of 5,330 overnight, which suggest that this previous support level might now be holding as resistance. The index is still in an overall longer-term uptrend, but we can no longer draw a comfortable uptrend line. Similarly the current drop has been too steep to draw in a downtrend line. Instead, we must look at key support and resistance levels. Should the 5,330 break tonight, the next target would be 5,400.

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