ESS Daily Report, page-54

The deadlock continues - what will break it?

Yes ESS gained 1.5c to finish at 33.5c. Our volume was on the lower side, just over 475k shares traded. Yesterday volume wise we did the lowest for the year. Today was not much more. I feel its indicative of possible bottom. It was good trading today and getting close to 34 which I feel is a key number. Shortly maybe, if markets behave.

ASX Li had another good day on the back of 2% rise yesterday. Of the 54 stocks that I track, average gain was another 2.5% today.

Overnight US Li stocks finally gave up the losing game they were playing for some time. Although the ETF of LIT increased only around 1.3%, but average of other Li stocks was over 5% - so decent gain.

What next:
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Yesterday SP 500 again went up and down in green and red, finally finishing around 0.75% up at 3852. ASX though was buying none of it. Though it was not red, but mild green all day, finishing nearly flat.
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As I have mentioned last few days, SP 500 is trading at 3850 +/- now for around 3 weeks. There was lot of anticipation that some key economic data yesterday would break the deadlock. But that was not to be. Numbers were mixed and Fed as usual very hawkish. Markets running on technicals now.
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So what will break the deadlock? Possibly a strong technical break up in either direction depending on who is more powerful, the bulls or the bears. If the bears and bulls can't resolve, then we need more economic data. On Friday we have Unemployment and Non-Farm Payroll. They can certainly provide direction. If that is not good enough, there is very high chance next Thursday when we get CPI data around Inflation, that will be it. Till that time there is a chance the tussle may go on. But because the bears are in control, we are in bear market, long term is still downtrend, so the more we stay here it gets better for a positive move - as it means sellers are losing their firepower.
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Lead indicators yesterday were very much in favour of the markets. All 3 key indicators fell - Dollar Index, Yields and Volatility Index VIX. One of the reasons market went in positive direction. All these indicators are still pointing towards the elusive bounce I have been talking about, but someone has to make a big move.
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Charts are also pointing towards a big move in either direction, probability to move forward is still slightly better. SP 500 numbers 3900/3960/4030 on up, down 3780/3750 needs to hold.
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Personally I am still there rotating and adding some. As I mentioned on the weekend, to hedge I had put some good number in couple of oil/gas - making sure no announcement is due. Its important in Oil/gas not to play announcement, just the hype, because success rate of drill is not good. One of them made a big gain in last few days and I got out today as it met my target - there was a good gain of around 40%. It can still go up but thought will take a break. Other thing, some stocks are looking like getting ready for a move - so did some rotation into them. Also, as I have mentioned in last few days that I am playing for a bounce, so have been cautiously adding all this week.
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So what will happen tonight? 3 weeks back on Dec 16, the SP 500 finished at 3852. Yesterday it finished at 3852. Its going sideways, consolidating and coiling - will blast any time. Some economic data tonight, but nothing very important. Asian markets largely green. Will no economic data, its now between the bulls and bears - who will blink first? probability is still in favour of the bulls in short term. Will that happen? Lets hope so. All the best.