The XJO is expected to open higher this morning following a strong recovery in the U.S overnight. Their futures are mixed this morning.

Well, the pullback was short-lived. What was roughly eight days of straight gains in a tremendous run higher, has been met with only a pause for now. We of course could see a continued pullback, but at this stage markets seem happy to consolidate here for a spell.

We should open near 7,640 this morning, just above our previous all-time highs. It seems reasonable to retest 7,680 today, however U.S futures are mixed which may cause unease in our market and we could simply do most of the days move on open.

Ultimately, it is surprising to see yesterday’s pullback not being met with further profit taking and some healthy mean-reversion. The uptrend line at this stage comes in at 7,450 to 7,500 which remain the next key targets if we do see a pullback – which still seems the most likely case. Of course, it comes down to the U.S, which is once again casting aside Powell’s future guidance and making their own predictions about rate cuts in the March.

US Markets

US shares rebounded overnight, retracing most of the selling from the prior session. US markets pushed back up on little news, and they rallied ahead of some major company earnings reporting from Amazon, Apple, and Facebook. Both Amazon and Facebook are trading strongly higher in after market trading following their earnings announcements, though Apple is trading lower. US markets will also see an unemployment report tonight, which is expected to show a slight rise in unemployment, though still at a very low 3.8%. Overall, despite the Federal Reserve signalling that they are unlikely to cut rates in March, plenty in the market still believe a March rate cut will occur. Regardless, US investors seem happy to continue to buy at the current lofty levels.

Ten of the eleven sector groups of the SP500 closed higher overnight, with the Discretionary, Staples, and Utilities sectors faring best. Most other sectors closed firmly higher, except for financials, which were flat, and Energy, which closed lower after selling in oil.

The SP500 rebounded overnight and we will now need to see if it will eclipse the recent peak for the market at roughly 4,930. Should that occur, we will likely see further upwards movement, perhaps to the 5,000 point level. Should the index resume falling from here, the first downside target would be 4,800 index points.

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.