The XJO is expected to open higher once again following a continued rally in the U.S overnight. Their futures are flat.

Yesterday we crept higher and managed to hold onto our gains into the close. We should flirt with both key resistance at 7,700 and the 50 day MA today. This means that our market is neither overbought nor oversold in the short-term as we are trading at the average price for the market for the past 50 trading days. The short-term stochastic have also normalised. We have also mean reverted to the middle of the Bollinger bands.

Our market could have some gas left in it to get to 7,750 or 7,800, but we would need to see the U.S continue higher first. In the medium term, the markets still need to tackle the reality that interest rate cuts may not happen this year, however they are likely waiting for further data to come out first. We have local CPI data today at 11:30am AEST. CPI is expected to fall from the same point last year, but slightly increase from last month. If the numbers are shocking it is possible our market has a strong reaction, however we are more likely to let it wash over and keep our movements tied to how the U.S trades if the numbers come in largely as expected.

US Market

US shares rebounded overnight, continuing higher for their second straight session, with prices rising for the second straight session. It does come after six sessions of falls prior to that however. Overnight US economic data was a littler more mixed, with more home sales than expected, though S&P global US PMIs were lower than expected. Company earnings reporting was mostly positive overnight, with Tesla and Visa jumping after their earnings results, while PepsiCo fell. The positive earnings moves were likely the big driver of gains overnight, because US markets are clearly still concerned around the reduced likelihood of rate cuts.

Ten of the eleven sector groups of the SP500 closed higher overnight, with Communications and Technology stocks the strongest performer. Materials were the only stocks to close lower on average.

Technically, the SP500 continued to rebound overnight, perhaps suggesting a move back to the 5,100 level. Should we see a move above 5,100, the next target would be 5,150. If the index continues to fall and breaks below the next potential support at 4,950, we will likely see another strong drop.

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