Did Powell just blink to keep the bounce to complete?
Yes ESS remained flat to finish at 48.5c. Our volume was good but its slowly decreasing, just around 10m shares traded. Trading in a very narrow range of 1c - which may be expected. Lets see what breaks this pattern.
ASX Li stocks had a good day overall with many stocks looking strong. There were some that didn't do well and dragged the average down. Of the 73 stocks that I track, there was average gain of around 1%.
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Overnight US Li markets could not capitalise on a good market day. Many were in red, average loss was around 1% - may be tonight they will make up.
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What next:
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Yesterday there was a lot of anticipation around what Powell will say - in fact, to what extent he would be hawkish. Well, he threw in a surprise. He was not going to talk about US situation. That was a big surprise. Markets are on a slight bounce and he would have loved to push it down. But he blinked - a tacit approval to let the markets go in its merry. And it did so. SP 500 opened lower but got better as day progressed. It finished at 3919 - a gain of 0.7%. ASX too loved the idea and gained around 0.9%.
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For those who read or remember my posts, I have been calling for a bounce and a test of 4000/4030 on SP 500 now for some weeks. Although we were stuck in 3800s for a while, the bounce was still intact and it never went below a critical level to nullify it. Yesterday, after a month we had another close above 3900 - yes it took a month. 3900 on SP 500 is critical level. I still remember long time back when 3900 was not held, I had written that I will exit most positions if it looks like not holding, and had actually done so. So a cross and finish over 3900 again, for me is quite bullish. Though anything can happen, in short term the bounce theory is still intact, infact, it got a boost yesterday.
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On Thursday we will have CPI data. It will provide strong direction to markets. The expectation is that it will come lower than 7.1 last month. But markets don't care if its lower, it should be lower than what people/economists expect. And therein lies the problem. A good read is not enough. As I wrote on the weekend - its all about expectation - in life - for CPI reading. So the number has to be better than expectation for a positive break. If we get a good number, there is a good chance that test of 4000/4030 may happen - whether it holds is to be seen. If the number is not good - uhmm, lets not talk about it and spoil the fun.
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Personally I was a big buyer today. One sector where I write, the U sector, I had exited all my positions around 3 months back when it was not looking good. I bought some couple of days back, but today I bought big. Also bought a number of Li stocks (switched as well), some battery and some Oil/Gas. One of the strategy I am following is to stay away from any stocks that are drilling or did not have a good previous drill result. If general markets improve, there is a good chance a number of stocks will increase. So I feel it is not worth being in a stock that is doing some critical drilling which can tank it on a bad result. So overall, there is still lot of risks, but have gone big and taken some risk, lets see.
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So what will happen tonight? No major economic data tonight. Asian markets largely green. There is some unfinished business for SP 500 from other day when it was pushed down from 3950, it wants to test 3960 - I feel its ready. Will that happen? Lets hope so. All the best
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