The XJO is expected to open flat this morning despite a push higher in the U.S overnight. Most sectors were flat to negative, but tech jumped 4.45% pushing their indexes higher. Our market in comparison is light on tech and with their other sectors flat to negative we aren’t set to price in similar gains on open this morning. Their futures have also edged into the red, giving us little indication that the gains will be sustained.

As predicted, our market yesterday pretty much held its lows into the close. The past few attempts at 7,150 had resulted in intraday bounces to finish at roughly 7,200. However the negative sentiment around inflation, monetary policy, and delays in U.S debt ceiling kept our market from retracing and indeed dipping just below the key support.

In general, markets eventually retrace to their 200 day MA, and we are pretty much there. It is unlikely that we will fall much further without the U.S selling off also, and the 200 day MA will offer a point of equilibrium for our market as we wait and see how things unfold. If further falls are to come then the next key level is back down at our lows of roughly 6,900 to 7,000 with some interim support at 7,050. Otherwise, 7,200 is likely our next level of resistance.

Overall it is good to see our market moving again as it offers trading opportunities. Broadly speaking, it still feels like there is more pressure to the downside, with our recent lows a more realistic target in the short term than our recent highs.

US Markets

US shares closed mostly higher overnight, with technology stocks jumping strongly higher, lifting the NASDAQ and SP500 into the green, while the more value-based DOW JONES finished slightly lower. The movement comes after a big jump higher in NVIDIA stock, which rose more than 27 percent after a much better than expected earnings result. There was also some news that US politicians were close to a deal on lifting the debt ceiling, with the disagreements down to just $US70 Billion of discretionary spending. Economic data overnight from the US was also mostly positive, with fewer than expected jobless claims, while US GDP was revised higher for the first quarter.

Five of the eleven sector groups of the SP500 closed higher overnight, with Technology stocks by far the strongest performers. Energy stocks saw the most selling after a drop in oil prices, while Healthcare and Utilities stocks also saw notable selling.

The SP500 remains in the sideways consolidation range of 4,050 to 4,200 and we have to expect further sideways movement unless 4,200 or 4,050 breaks. Should it break below 4,050, the next target would be the support at 4,000. While a break above 4,200 will likely see an uptrend for the SP500, with a possible upside target of 4,300.

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