Did Powell miscalculate?Yes AZL gained 2 pips to finish at 7.4c....

Did Powell miscalculate?

Yes AZL gained 2 pips to finish at 7.4c. Our volume was average, just over 11m shares traded. A good day today and inching back towards 7.7 and get into the next trading zone - hopefully soon.

ASX Li stocks made small gains today. Of the 54 stocks that I track, average gain was 1%.

Overnight US Li stocks made big gains and average gain was around 5%. We failed to match them, hopefully the nervousness dies after further gains in markets.


What next:

Yesterday US markets had one of the biggest positive nights it has had this year, and they have only been few. SP 500 gained around 3% and now sits at 4080. ASX also did well, slightly subdued in comparison to US markets, but we also had lost less than the. It gained around 1% for the day.

For those that read my posts, one number I was calling out is around 4060/70 - the 200 day moving average on SP 500. It was the biggest hurdle for 2022 and all attempts till now had failed. We always retreated from this point to have big drops. Yesterday we were successful for first time. It is quite significant, though a follow up needs to happen to be above that.
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So from general markets perspective and specifically SP 500, we have now crossed the third hurdle in the rally that is taking place. First was 3900, then 4000 and now at 4080 sitting above 200 day moving average. Where to from here? There are many who are still calling this a bear market rally and many will only give up or embrace if SP 500 reaches around 4230 - a number I have mentioned in last few days. There are other intermediate numbers, but this one is the next critical one. It sits just under 4% from here.
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So how did this happen? Yesterday I said "If Powell is even neutral, I feel our rally may continue" .Before market opened, some economic numbers came which were mixed, market was slightly down till Powell speech. He said many hawkish things but one statement he made around slow down in interest rate hikes. What did punters do? They have been battered through out the year and used to very hawkish statements from Powell. This statement was gold - and markets latched on to it. Nasdaq which has got hammering in last few weeks jumped around 4.5%. After his speech and seeing how market reacted, Powell must be thinking - Did I say something wrong? But the die has already been cast. He will get another attempt to rectify if he is not happy, but that's couple of weeks to go and we make merry till then. Or he really believes numbers are telling a good story on inflation - its nearly 12 months now of bad markets.

Lead indicators are looking good, Dollar Index, Yields and Volatility Index VIX which is now at 20.58.

But many analysts have still not given up. they feel PCE or other data will crush us. VIX getting below 20 is good, but they use similarity that reversal of VIX happens around this zone, so we may be reaching the market top. Most analysts follow what has happened before. In 2022 many things have happened for first time and defied previous patterns. Many don't take that into account. Lets see, its unpredictable and so some get it right and others wrong.

So what will happen tonight? Markets in strong legs. Asian markets also did well. PCE data tonight which could give some direction along with manufacturing numbers. But our first step is to stay above the 200 day moving average so that it does not look like a false start. Odds are still very good of an attempt at numbers I have been calling for over a month now 4100/4230. Will that happen? Lets hope so. All the best.