The XJO is expected to open flat this morning following a marginal pullback in the U.S overnight which saw their market retake most of the early session losses into the close. Their futures sit flat.

Yesterday was stronger selling that expected, on the back of what feels like little news. We broke below key support at 7,200, perhaps simply on the back of the U.S showing signs of further selling. Perhaps today we will sheepishly claw back above 7,200 given the U.S only had a marginal retreat overnight.

Even though we are experiencing large movements as volatility remains high, it seems these are just whipsaw movements in a rangebound market. We should expect 7,100 to hold, which is both roughly our recent lows and perhaps where an uptrend line comes in.

US Markets

US shares closed flat to lower overnight, with the DOW JONES finishing slightly higher, while the SP500 and NASDAQ finished slightly lower. US shares initially traded firmly lower but managed to reverse most of the losses by the close. US economic data continued to come in strong overnight, with lower than expected jobless claims, while labor costs were higher than expected. Overall this data was initially seen as negative for the market because it could worsen inflation issues. However, perhaps reacting to technical levels, US markets pushed higher into the close. There is a lack of major US data tonight, so its entirely possible we see a quite end to the week for US markets.

Six of the eleven sector groups of the SP500 closed higher overnight, with Utilities the strongest performers. Technology stocks saw the most selling, while most other sectors closed flat.

Technically, the SP500 has fallen back to the support level at 4,450, which it again held overnight. Should this level break, we will likely see a move back to 4,350. However, should it rise through the recent resistance at 4,525, the next level to the upside would be 4,600.

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