The XJO is expected to open lower this morning. This follows a fairly flat night in the U.S, however their futures have moved well into the red this morning which will likely weigh on our market today.
Yesterday was in step with the indecisive and low volatility environment we have been trading in for the past couple of weeks. We continue to track towards the point of the triangle. The uptrend line comes in just above 7,600 and we will likely test it today.
Markets are waiting. What for, is hard to know. We will need to wait and see which way markets break.
US shares closed lower overnight, with each of the three major indices finishing in the red. The latest data overnight showed a slightly lower revision to US 4Q23 GDP, but the GDP price index was revised higher, which suggest that inflation is sticky and that interest rates are likely to remain higher for longer, with the rate cut timetable being pushed out. Overall, prices in the US have rallied for three to four months and prices are looking a bit steep at these levels. To continue rising, further positive news may be needed. Tonight we will see the release of the PCE price index. The PCE data is perhaps the most important of the data this week, as according to the Federal Reserve, this is their preferred measure of inflation.
Seven of the eleven sector groups of the SP500 closed higher overnight, with Real Estate the only sector to see notable gains. Communications stocks saw the most selling.
The SP500 reached a milestone intra-day high of 5,100 on Friday. However, the index may have subsequently shown a candlestick reversal pattern up the top of the range, which could suggest a pullback back towards the longer-term uptrend line and the potential support level at 5,000. Should the index reverse and push higher, it would need to break above 5,100 for further gains to look likely.
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