The XJO is expected to edge higher on open this morning following a U.S session which was mostly down but managed to crawl back intraday losses to finish marginally in the green. Their futures have also edged into the green.
We should open testing 7,850 resistance, though it is hard to suggest we will break it in any meaningful way today as we are likely reluctant to make much headway before the U.S CPI reading tonight. Writing has been on the wall for a while now that interest rate cuts are likely delayed as data in the U.S has been strong lately. If they get another strong CPI reading, their market is likely to react.
7,750 remains key support and 7,850 remains key resistance. Beyond that we have all-time highs at roughly 7,900, but if the U.S tumbles tonight then 7,700 is a reasonable expectation. This is also where the 50 day MA comes in.
US Markets
US shares closed flat overnight after initially trading firmly lower, with the SP500 trading down to recent support around 5,150 before rebounding in the last hour to close just above the key 5,200 level. Movements were back-and-fourth ahead of tonight’s key CPI report, which will be closely watched after continued strong economic data and CPI in January and February. Indeed, overnight US Federal Reserve Bank of Atlanta president Raphael Bostic reiterated his expectation for one interest rate cut this year, with many other FED members also lowering expectations for rate cuts. Should CPI continue to come in strong, it should eventually lead to market selling as prices are currently unjustifiably expensive relative to bond yields. On the bond yield front, yields are trading at fairly high levels at the moment, back roughly to where they were in November last year. Share prices are also about to enter another earnings season in the US, which is expected to show earnings growth for the top 10 SP500 shares, and a small earnings contraction for the remaining 490.
Nine of the eleven sector groups of the SP500 closed higher overnight, with Real Estate the strongest performer, followed by Utilities stocks. Financials stocks saw the most selling.
Technically, the SP500 fell to back to the 5,150 support level intra-day overnight before rebounding back to 5,200. The market has been trading along 5,200 for the past week, seemingly unable to break away from this level, or at the very least, it has bounced very quickly from 5,150 when it has fallen. We will need to see a break below 5,150 for further selling to look likely, while a bounce from here would have to break through the 5,265 resistance for further gains to look likely.
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.
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)
- XJO to open flat with US markets back around resistance - September 2, 2024
- US markets close lower ahead of NVIDIA report, which disappoints - August 29, 2024
- Investors take pause ahead of key NVIDIA report - August 28, 2024
Leave a Comment
You must be logged in to post a comment.