ESS Daily Report, page-70

Punters nervous?

Yes ESS gained 1c to finish at 50c. Our volume has come back, after 2 average volume days, we are again in the higher range, just over 10m shares traded. Well, today's trading was different from all of last few days since announcement. A new announcement with new information or trading above 50c was to provide the change. We got the second one. Looks like someone wants in. But may be patient after pushing above 50 and waiting for sellers to come to the zone. Today was the first day and needs to be followed by another day, just for confirmation, but its a very positive change and opens up a number of theories. Lets see what's in store tomorrow - any substantial holding notice?

ASX Li stocks were looking jittery. Though no big falls, but eased. Of the 73 stocks that I track, average loss was 1%.
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What next:
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US markets to open tonight. SP 500 sitting at 3999. First hurdle is to cross 4030 and finish above 4000. On weakness, has to stay above 3900 otherwise the sentiment may change. ASX was in red the whole day, but not much. Finally it finished in a very slight red - nearly flat.
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The trading today was similar to how we do on Monday. Waiting for US markets to provide direction, sideways to slight red. I was hoping that we did that yesterday, so we could do a slight green, but punters seemed a bit nervous, not in a buying mood. So it played out like another Monday.
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Lot of indicators are in a critical zone. One of the biggest indicator from chart perspective that is spooking a lot of punters is SP 500 approaching the strong downward trendline. In 2022, we never crossed that trendline and 3 times had big reversals from there. Last time was when we reached 4100 and reversed doing a double top. That time many said that it is too obvious a point for shorting and reversal so it will not happen - but unfortunately it did happen - a third time. This time the trendline has come down sloping and now sits around 4030 - which is under 1% from here. Though it is a very obvious zone of reversal, many feel we may do that again. But as I have been writing last few days, couple of patterns of 2022 has not held - who knows, this may be another one we may break.
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Other indicator is Volatility Index VIX. It is sitting at 18.35 - this is a 51 week low, just shy of 52 week low. This is another zone where VIX previously has made bottoms. Many feel it may do that again and rise from here, bringing down the stock market with it.
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But there is some good news too. Lot of people have started becoming less bearish, if not full bullish. Some feel in the near short term, SP 500 will test 4100. And if it crosses that and another couple of percentage, it may lead to a bull run. It may not happen suddenly, or in a straight line, but gradually. What it means then is that less chance of going much low - that will bring in lot of investors.
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Something that was different in trading in US last 2 days was a shift to risk-on sectors. Before that, the rise was driven by risk-off sectors - but the last 2 days was led by risk-on sectors. This is good for stock markets. The biggest risk-on sector is Cryptos. And suddenly in last few days they have jumped around 25%. Bitcoin which very recently was looking like heading to 15k and below, is now above 21k and pushing towards 22k which is a very key zone. Nothing can be more riskier than Cryptos. What has led the rally? Some feel it is a precursor to stock market rally. For quite sometime that correlation worked well but it got lost in second half of last year. Is that coming back? Are we in for a crypto type 25% rally? That would be too much, but lets hope we cover 4030/4100 and finally 4170 - then we will enter bull market as measured by many.
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So what will happen tonight? US markets in small red and at this stage it looks like we may finish in red - hopefully not much - within 0.5%. Asian markets were mixed - HK fell but Nikkei gained. No major economic data tonight. Tomorrow is PPI data which can provide direction. But earnings report continues with some big financial companies to report tonight - that can provide direction. A finish above 4000 on SP 500 has eluded us for a long time - probability says it is due shortly - may be tonight? Will that happen? Lets hope so. All the best