US shares mostly higher despite late selling, XJO to rise

The XJO is expected to open higher this morning following a recovery in the U.S which saw their market rebound from support and their underlying uptrend line.

Our market should open just above 7,800. Like the U.S, we are also bouncing from key support at 7,750 which we stalled at yesterday. With U.S futures being in the green, coupled with our overextended pullback yesterday, don’t be surprised of a continued move higher throughout our session. 7,850 is the next key resistance and 7,900 is the all-time high.

Our market continues to broadly make higher peaks and troughs. The most recent peak was fresh all-time highs, and if we turn around from here, we could be seeing another higher trough. It is hard to suggest the market will go onto to make fresh highs again soon, however we should continue to assume a cautiously bullish stance until we see evidence of otherwise.

US Markets

US shares closed relatively flat overnight, with each of the three major indices pulling back late to give up earlier gains. There was a fair amount of US economic data overnight, with more jobs created than expected, but with lower than expected manufacturing and services PMIs. The main event however were speeches from Fed Chair Jerome Powell and Fed member Raphael Bostic. Powell remained very dovish, stating that “easing policy too late or too little could unduly weaken economic activity and employment.” Ultimately, it seems like Powell is stating whatever he can to try keep markets pushing higher. However, Bostic was a little more hawkish stating that he sees only one rate cut this year, likely in the fourth quarter. The next major data event for US markets will be unemployment this week, and if it comes in lower than expected, we could see resumed selling in US markets.

Eight of the eleven sector groups of the SP500 closed higher overnight, with Communications the strongest performer, followed by Energy stocks. Staples stocks saw the most selling, and most sectors were fairly flat.

Technically, the SP500 bounced off the first support level and roughly the longer-term uptrend line around 5,180 – 5,200. There wasnt a whole heap of conviction in bouncing off this level overnight and so will need to see if these levels hold or break. Should we see a bounce from here, we could see the index return to the all-time high resistance level around 5,260. Should the SP500 break below support, the first downside target would likely be the 5,100 point level.

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