The XJO is expected to open flat this morning despite a pullback in the U.S overnight. Yesterday we pulled right back from our highs to finish fairly flat, and coupled with slightly positive U.S futures, this is likely why we are seeing a muted open.
Yesterday we tested the key resistance at roughly 7,380 in the morning session. However, local employment data came in stronger than expected and virtually triggered a sell down for the rest of the day. Positive economic data further entrenches the idea of longer lasting higher interest rates which has been the main driver behind the overall disconnect between our sidewards market and the U.S which is clearly up trending.
It is hard not to expect a pullback from both our market and the U.S considering how overbought they look, especially considering the strong jobs numbers from yesterday. However, we may see some consolidation at the top of the range and a re-testing of resistance first.
US Markets
US shares closed mostly lower overnight, with the SP500 and NASDAQ finishing in the red, while the DOW JONES finished in the green for an incredible 9th session in a row. Technology stocks led the selling after disappointing earnings reports from Tesla and Netflix. Chip maker Taiwan Semiconductor also fell after their earnings report, while Johnson & Johnson jumped strongly after its results. On the economic reporting front, US Jobless claims were lower than expected, while Home Sales and the Philadelphia manufacturing index were worse than expected. US markets still seem to have plenty of bullish momentum, with prices in general trying to grind higher. Only disappointing reporting from some tech stocks was able to force those tech stocks lower. However, it should be worth noting that earnings will have to be pretty good for US shares to continue higher from here, and so far this hasn’t really been the case.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Utilities and Healthcare the strongest performers. Discretionary, Technology, and Communications stocks all saw significant selling.
Technically the SP500 is continuing on its uptrend and now the next potential resistance level is some way away at the 4,600 level. This level hasn’t been reached in over a year, so its hard to say whether this will be the resistance level or not. Should the index fall from here, recent resistance at 4,450 may now act as support.
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Advisor at TradersCircle and Emerald Financial
Joining the team at TradersCircle in 2011, Karo has extensive experience in both investing education and derivatives trading.
Latest posts by Karo Cornips (see all)
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