XJO to open slightly lower after US shares give up much of their gains

The XJO is expected to edge lower on open this morning despite a continued rally in the U.S overnight. Their futures are flat.

As to be expected, yesterday’s momentum will likely die down back into meek and indecisive movement.

Despite the underlying uptrend still likely in play, our market looks set to continue trading sideward in a broad range, between key resistance at roughly 7,850 and key support near 7,600.

The next move for our market may be to retest all-time highs at 7,850, however with a U.S that looks overbought in the immediate term, they look they could pullback which would likely keep our market lower or at least subdued.

US Markets

US shares closed higher again overnight, though they reversed from their intra-day highs. Prices initially continued higher with the bullish momentum from the Federal Reserve meeting on Wednesday, with the ‘FED’ coming out a little more dovish than expected. US economic data was mostly stronger than expected overnight, with stronger than expected Manufacturing PMIs, Home Sales, Composite PMIs, and with fewer jobless claims than expected. However, Services PMI was slightly lower than expected. Dragging the market was Apple, which is again being sued for anticompetitive behaviour, this time by the US department of Justice. Overall the momentum remains to the upside for US shares, but prices do look elevated at these levels. Additionally, the FED is remaining dovish, yet inflation is no longer coming down as it was in late 2023; should inflation resume falling that will likely be another bullish catalyst for the market, but if it does not, there is a large potential downside given the current high prices.

Nine of the eleven sector groups of the SP500 closed higher overnight, with Industrials the strongest performers, followed by Financials and Energy stocks. Communications and Utilities stocks were the only ones to close lower on average.

Technically, the SP500 broke out of the ascending triangle on Wednesday night, breaking above the previous all-time high resistance. Technically, the SP500 looks like continuing higher from here, though given these levels have never been seen before, its hard to say where the rally may stall, to the downside, the previous resistance at 5,175, which is also roughly where the uptrend line sits, is likely to act as support.

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