What happened to the Santa rally?Yes ESS lost 2c to finish at...

What happened to the Santa rally?

Yes ESS lost 2c to finish at 30c. Our volume was on lower side, just over 860k shares traded. Very low volume similar to last 2 days. We have reached a critical level, a hold of 30c would be good.

ASX Li stocks were slight meltdown today. Of the 54 stocks that I track, there was average loss of around 3.5%. Many stocks behaving like June bottom. Overnight Tesla big drop has spooked the market - again. General markets are itself a challenge, and then then w eget some reports, some sell off etc. I was looking at the Puts (Shorts) which were on Tesla a day before - and it was massive. Tesla has lost around 43% in just few weeks. Another test for the sector. We came out all right from June bottom. I don't think fundamentals have changed much. Once the sentiment changes, there is a good chance of decent rebounds.

Overnight US Li stocks were looking to capitulate. Although the ETF of LIT lost only around 0.25%, but most other stocks had decent loss of over 5%.

What next:
.
Yesterday US markets had a choppy day. SP 500 losing around 0.4% and finishing on 3829. ASX too lost in similar range - around 0.3%
.
So the Santa rally that was to start yesterday did not happen, So will we not get a rally this year? Although trading has been patchy and big tech stocks are in decent decline, dragging the indices with them. The technicals are still pointing towards some sort of bounce to happen. SP 500 needs to regain 3900 and possibly 4000. The sloping trendline which we reversed from at 4100 doing double top, has come down to around 4030 level - that could be in play, in case a bounce happens. If it goes down, 3750 is crucial to hold, else a quick drop to early 3600 is in play.
.
Its a real test of the stock market. Its been a tough 2022. We had a massive sell down in June when we made what we are calling as June bottom. After exactly 6 months, stocks are behaving nearly the same, showing no strength and many looking like it may capitulate. There is a chance we may bottom out here - but whether its now or a bit later, is to be seen.
.
Personally as I mentioned on the weekly report, I am playing defensive and looking for clear direction. Many stocks have reached good buy levels, but I want to see a change in trend before making a jump.
.
So what will happen tonight? SP 500 is trading sideways for some time now. Very soon, it could be tonight, that the coiling may have to give. Which direction will it go? There is a good chance Santa may still bring some cheer and we make some good gains in the next few days. Will that happen? Lets hope so. All the best.