The XJO is expected to open flat this morning following a continued move sideward from the U.S overnight. Their market finished marginally higher, and their futures are flat this morning.

Yesterday we had a moment of uncharacteristic clarity as we extended the previous sessions’ gains with a strong move higher. The cause for the vigour is hard to pin-point, however sentiment around Australian monetary policy is moving towards the belief that like the U.S, we too are at peak rates. Coupled with the fact we have not risen even half as much as the U.S in the recent bull run, even selling off over the past consolidation as opposed to their sidewards movement, and yesterday’s rally felt due.

Our move higher broke the very short-term downtrend line, and what is looking like a flag pattern. This should translate to another bull run to roughly 7,200 to 7,300 in the medium term, but of course we would need to see the U.S hold strength and even potentially make fresh all-time highs for this to eventuate. 7,100 remains the first key resistance, which the flag pattern would dictate we break. Beyond that we have 7,150 which is where the 200 day MA comes in. Our market should find some comfort around here, as it is the average price our market has traded at for the past 200 sessions.

US Markets

US shares closed mostly higher again overnight, with the DOW JONES recording a massive gain, the SP500 seeing modest buying, and the NASDAQ closing slightly lower. The movements came on the back of some mixed economic data, with pending home sales falling to their lowest level since pre-GFC times, while there were fewer jobless claims than expected. The data continues to point to weakening inflation and potentially a soft economic landing – pretty much everything that shares want to see. However, with prices rising back towards yearly highs and with massive gains across the past month, profit taking is creeping in and this seems to be preventing prices from rising too much in the short-term.

Eight of the eleven sector groups of the SP500 closed higher overnight, with Healthcare the strongest performer, followed by Industrial and Materials stocks. Most stocks saw notable buying. Communications, Technology, and Discretionary stocks saw selling.

Technically, the SP500 has been moving sideways around the key level of 4,550 index points. The index has struggled to draw itself away from this level for the past week, should it rise from here, 4,600 is likely to act as resistance. Should it fall from here, we would expect an eventual higher trough for the index, perhaps around 4,450 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.