The pullback in the US is continued but only back to the lows of Tuesday night’s session. It is still unclear whether this is the bottom of the move or not. Technically we have lower peaks in the US indices but not yet a lower trough. This still seems more like some profit-taking rather than the start of a large pullback like we saw in March.
Locally our market did not rise anywhere as much as the US, but we still taking part in the fall. We have seen many of the top 20 stocks pullback recently, in particular staples with WOW and COL falling over 10%. The Big four have edged lower and CSL continues to hold near the bottom of their range. So the XJO remains weak, but there are some hidden gems out there still holding strong. CSR, ABC, RIO, BRN are all set to close the week higher.
The XJO is set to open lower following a strong sell off in the U.S last night. We are expected to open near 5850, near the lows of yesterday. U.S futures are in the green this morning, and if they remain so during our session today, it is unlikely we see a continued sell off.
We continue to trade in the broad channel, hovering on support. To break these levels, we likely need to see the U.S break their support. There is also potentially a short term downtrend in play, and with a break of the channel, it will help confirm it. Ultimately, next week will indicate whether we continue the downtrend, or the channel.
The Stochastic continue to point down but are heading to oversold territory in the short term. The 100 day MA is acting as support with the market not willing to stay below it the past week or so.
US shares fell again overnight, with the S&P 500 falling for the fourth session in the past five. Tech stocks once again led the selling, with stocks that had performed strongest in the post virus world seeing the most selling. It is hard to pinpoint exact reasons for the selling, but stretched valuations, a weakening of the US-China relationship, persistent economic problems due to the virus, and issues with some of the major vaccine candidates have all been talked about in the financial press.
Overnight we saw worse than expected US jobless claims, as well as a surprise increase in oil inventories. However, PPI a measure of production input prices, was stronger than expected. In addition to tech stocks, oil & gas shares saw major selling, while every other sector pushed lower to varying degrees.