Has the big crash started?
Yes ESS lost 2.5c to finish at 35.5c. Our volume was average, just over 2.1m shares traded. So we lost support of 38c, next number is 34. It looks like June once again.
ASX Li stocks had a decent decline today. Of the 54 stocks that I track, average loss was 5%
Overnight US Li stocks were also in decline and similar margin to us.
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Lots of reports around Demand Crush, Price drop etc spooking the Li sector. A big test is on, many sceptics commenting that Lithium bubble has burst. I am no expert, but to me it looks unlikely, Next few days/weeks will give a better picture. As such general markets are not doing well, chance of recession, drop in earnings etc driving sentiment down. Once the hysteria is gone and everyone thinks level headed, we will get a better picture.
What next:
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Yesterday SP 500 declined by 0.6%. ASX too lost similar margin of around 0.6%
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Based on my reading, most analysts now feel that there is a good chance we may decline from here. Last couple of months many have been calling out that SP 500 would reach between 3100/3400. But after a good rise from 3500 to 4100, it looked unlikely, but last 2 days trading has increased the odds.
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From a bull perspective, our best bet was on Tuesday on getting a great CPI number. But instead of making a good gain, a very good start was given away. And what did playmakers do? As I wrote yesterday that we reached 4100 on Dec 1 and same number 4100 on Tuesday. So we did a double top, a bearish outlook on the charts. If the great CPI number was not able to pull in the forward direction, there are no big economic data in the next few weeks that can have a very positive impact. It can happen, but sentiment has to be a big driver as well. So if we don't have chance of gaining much, we can go sideways or slide down. That is the worry part.
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As I have been writing for last few days, the time is not to take a chance - possibly be defensive. Let the price action guide and that's what I am doing, trying to be defensive. If things turn to the upside, I feel there may be enough time to react and take advantage of it. I know most of us are long termers and I also hold lot of shares besides my trading shares - so anxious moments ahead and hope for the best. It looks like June type of bottom is coming. On the positive note, we overrode the June bottom and there is a good chance we will override this. Long term trend of stocks is in up direction, if we take few years into account, 2022 has been a very bad year in general.
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So what will happen tonight? Not sure, technicals should drive the market along with sentiment. Tomorrow is Options Expiry, trillions of dollars, and Wall Street Market Makers will try their best to put the number so that most Options expire worthless. As I wrote yesterday, downside will become bearish if we finish below 3930 and bullish if we finish above 4080. So we are still in the chopping zone, and as long as we are here, there is still a chance that we may make a run for the upside. Will that happen? Lets hope so. All the best.
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