The XJO is expected to open lower this morning following a pullback in the U.S overnight. Their futures are flat.

At this stage we are expected to open right on the 200 day MA which comes in at roughly 7,230, however as market open approaches this could change. Regardless we will trade near the convergence of the 50, 100, and 200 day MAs which come in at roughly 7,230 to 7,250 during our session today. This is not surprising as in times of uncertainty markets will mean revert. Indeed, the U.S pulled back to their own 50 day MA and have skirted along it the during past few sessions.

In the short-term, we should expect to hang around between roughly 7,200 and 7,300. This would mark our market as neither overbought or oversold in the short, medium, or even long term according to the moving averages. And unless we see the U.S continue trending lower or have a decent rebound higher, it seems unlikely we will move too far outside the comfort of this range.

Our market has started forming a downtrend, and today’s expected open will add further credence to its formation. Whether this changes or continues will develop as the U.S decides whether it will hold or break lower.

US Markets

US shares fell overnight, with each of the three major indices finishing notably lower. US retail sales came in stronger than expected for July and when combined with the higher than expected inflation for July it might be starting to look like there are more rate rises to come. This is obviously not what investors want to hear, especially after prices rallied all throughout July on the hope that inflation was over. Also complicating matters is the recent spike in oil prices, which could soon start to force up the price of other goods and services. US Federal Reserve members will meet next week at the Jackson Hole Symposium and the statements provided here will guide investor opinion on the likelihood of more rate rises moving forwards.

All eleven sector groups of the SP500 closed lower overnight. Energy stocks were the worst performers, but they were closely followed by Financials, Utilities, and Materials stocks.

Technically, the SP500 broke below the longer-term uptrend and key support level at 4,450 overnight. This is a key technical level and the break of it suggests further bearish movement. Possible downside targets include potential support levels at 4,400 and 4,320.

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