The XJO is expected to open flat this morning following a flat finish in the U.S. Their futures have edged into the red.

Markets have stalled at key levels. It was positive to see that 4,200 and the 200 day MA held in the U.S overnight. Indeed, their market rebounded off it in intraday to retake losses and finish flat. For our own market, we held 6,900 yesterday, rebounded off it and had a decent move higher. If U.S futures don’t selldown during our session today, we should expect our market to continue to hold 6,900.

We have retail sales today at 11:30am. We would still want to see these numbers come in weak (from a market perspective), but they are becoming less important as it is becoming clearer that consumers aren’t contributing much in the way of inflation – however it is still a huge driver in the economy.

US Market

US shares closed flat overnight with prices trading firmly lower at points before rebounding off technical levels to close around the daily highs. US mortgage rates rose to their highest levels since November 2000, as the rapid push higher in bond yields is continuing to put pressure on borrowers. Overnight US jobless claims were slightly lower than expected, which is good for society, but possibly not good for the market. The market will want to see unemployment rise, as that could trigger a turn-around in bond yields and rate cuts in the not too distant future. Tonight we will see the full US unemployment report, and again, the market will want to see unemployment rise. However, projections are that unemployment will fall, which does create some downside risk in tonight’s session.

Only four of the eleven sector groups of the SP500 closed higher overnight, with Real Estate stocks faring best. Staples stocks saw the most selling, followed by Materials stocks.

Technically, the SP500 is trading around the support at 4,250, and the 200-day moving average and longer-term uptrend line, which sat just a few points below this level. Overall the index is definitely in a downwards move, but its hard to say where it will find support. However, there are plenty of potential levels between 4,200 – 4,250, so it may have to close below 4,200 before another leg lower is triggered.

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