The XJO is set to tumble again today following a pullback in the U.S overnight. Their futures are flat.

Our market should retreat back to the comfort of the 50 day MA on open this morning, which comes in at roughly 7,740. We may selldown further to 7,700 support if things get worse come open, or U.S futures move into the red.

The market is trading in a broad channel, and now that we have tested and rebounded from the top of it at 7,900, it’s not surprising to see us pullback. We may not reach the bottom of the channel which comes in at roughly 7,550, as we should still expect the market to have a bullish tilt considering the renewed optimism around rate cuts this year. For now, it makes sense that we would hang around the 50 day MA and continue to watch how the U.S moves. They flirted with their previous all-time highs as support and managed to hold it, so if they rebound our market will likely follow suit. However if they continue their descent, our market has already had a heavy dose of falls and may stall at these levels.

US Markets

US shares closed lower overnight, with each of the three major indices closing in the red. This was despite a very strong gain from Tech-giant NVIDIA, which rose almost 10 percent for the session after reporting better than expected earnings results. Other US economic data showed strong manufacturing and services PMIs, which indicates that the economy is still growing strongly, potentially suggesting that interest rate cuts aren’t coming any time soon. US government bond yields did spike a bit overnight as well, further suggesting that investors are once again uncertain about rate cuts this year. There is a lack of major US data until next Thursday’s US GDP reading, so US markets could easily continue to drift lower with the current negative sentiment.

Only one sector group of the SP500 closed higher overnight, which was the Technology sector, which was driven higher by NVIDIA. Most other sectors saw strong selling, with Real Estate, Utilities, and Discretionary the worst performers.

Technically, the SP500 has formed resistance around 5,320, roughly the all-time high. The index has now fallen back to the previous all-time high at 5,260, which it held as support overnight. Should the index break below 5,260, they are likely to see further selling.

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