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

Our market yesterday was skeptical of the U.S run, and didn’t really price in their strong move higher from the night before. Our doji yesterday was the beginning of an evening star reversal pattern, and today’s expected pullback should complete it.

Of course, our market will continue to follow the U.S, and last night could simply be a pause after the strongest run they have had in twenty years. There is no doubt though, that both the SP500 and the XJO are overbought in the short-term.

We should open near 7,950, which has been a inflection point for our market in recent history. The next key level of support however is roughly 7,900 – our previous all-time highs.

US Markets

US shares stalled overnight, with prices closing slightly lower after eight days of strong gains. The stall came despite Fed member speeches overnight which all but confirmed that rate cuts are coming in September. There will be further speeches from Fed members this week, as there is a Federal Reserve policy symposium on at Jackson Hole Wyoming. The most important events will be the Fed meeting minutes tonight and a speech from Fed Chair Jerome Powell on Friday night. There will also be some PMI releases on Thursday night. Overall, US markets remain in a bullish mindset but given how high prices are, any bit of negative news will likely lead to extremely volatile movements.

Four of the eleven sector groups of the SP500 closed higher overnight, with Staples the strongest performers, followed by Healthcare. Energy stocks saw intense selling, while most other sectors were slightly lower.

Technically, the SP500 broke above the previous peak at 5,550 on Monday night but prices stalled overnight. Overall, the move now suggests a rise towards the all-time high peak at 5,670, which is now only one percent away. Should the index break through that level, it would indicate further upside. However, Should the index fall from here, we would have to look for a double top pattern forming which could be a reversal sign. Tonight’s move and whether the index breaks higher or lower will be extremely important.

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.