XJO to open flat after US markets stabilise

The XJO is expected to open flat this morning despite a meek pull back in the U.S following a night of indecisive trading. Their futures have edged into the green.

Yesterday we bounced intraday from key support at roughly 7,280 to 7,300 and this morning we are likely to test it again. U.S futures remained in the green for most our session yesterday, and today we may see a similar thing. However, our market will likely go into next week without committing too much buying or selling.

If we fail here then 7,200 to 7,250 is the next key support and where the 200, 100, and 50 day MAs have roughly converged. If the U.S continues to decline expect a move back to these comfort levels. However if we do see a relief rally then expect 7,380 to 7,400 as the next key resistance.

US Markets

US shares closed slightly lower overnight, with each of the three major indices finishing a small degree lower. US economic data was mixed, with labour costs rising by less than expected, while productivity lifted, factory orders were also higher than expected. Overall the data was mostly what the market would want to see, with a relatively resilient economy, though with data not looking too inflationary. After US markets closed, Apple and Amazon both reported earnings results, with Apple trading around 2 percent lower in aftermarket trading following a disappointing announcement, while Amazon jumped around 9 percent higher in aftermarket trading following its strong result. Tonight will be a major test for US markets with the release of the July jobs report. Bullish investors will be hoping for another ‘goldilocks’ reading, where earnings growth is low and perhaps with a slight rise in unemployment (suggesting less inflation), but with the data not too bad to suggest an economic downturn.

Eight of the eleven sector groups of the SP500 closed lower overnight, with Utilities the worst performers, followed by Real Estate stocks. Energy stocks were the only stocks to close strongly higher.

Technically the S&P500 is falling from the resistance level at 4,600 after has showing bearish signals. The index remains on an overall uptrend but we look to be seeing some profit taking and a bit of a pullback. Potential downside targets for the move are the longer-term uptrend and the previous resistance which may now act as support – both of these lines currently sit around 4,450.

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