MLS Chart, page-450

Will the tech stocks kill the rally?

Yes MLS lost 1 pip to finish on 3.9c. Our volume was very small, just over 733km shares traded.

ASX Li stocks started strongly but soon the overhang of Microsoft/Google earnings report made punters apprehensive. Of the 54 stocks I track, we lost an average of 2.5% today.

Overnight US Li stocks had a decent day and were above 4% on average. We lost 2.5% - so we made a differential of 6.5% disparity on a single day - lets see what happens tonight.

What next -

Yesterday I had written that there is a good chance the rally may continue and US markets did have a very good day. SP 500 gained another 1.6% to reach 3860. ASX though looked very timid and could not match US indices, barely in the green with gain of around 0.2%.

So now we have 3 good green days in US. In just 3 days SP 500 has nearly gained around 200 points (around 5.5%). The technicals still looking good, but both Microsoft and Google came below market expectations in their earning report. That was after yesterday's market close, so an adverse impact, if any, will happen today. They have provided fodder for this rally to be aborted - but will that happen or markets will overcome this slightly bad data?

Few good things happened yesterday night along with indices rise - 10 year yield had decent fall, Dollar index dropped, VIX dropped.

From a chart perspective, for a bull run, the 3900 level is very crucial to cross. This was a major support which was earlier broken and we moved towards 3500. Lot of people exited at 3900 level when it was not able to hold, including me with my trading stocks. Yesterday SP 500 came very close to 50 day moving, so that's the first hurdle. If things progress, a fight at 4100/4150 - but 3900 is important and big. For a bear case, a break below 3800, then 3780 and finally 3720. If 3720 does not hold, rally may be called over.

So what will happen tonight? US futures in good red. Asian markets largely green, good gains in some regions. Volatility Index VIX at 28.46 - nearly 5% drop - so good sign here. Cryptos have woken up from their slumber - Bitcoin now over 20k - looking good here. More earnings report, economic numbers around building and trade - they may provide short-term direction. There is a very good chance that markets may open red tonight. Technicals are still pointing towards a rally though fundamentals are pushing it slightly back. I had felt there is very high chance that an encounter at 3900 in SP 500 may happen as part of this rally - even if its not today. Even though futures not looking good, I have a feeling there is still a fair chance, even for tonight, though odds are not very good. Will that happen? Lets hope so. All the best