General Discussion, page-1226

Another day of reckoning with Mr Powell?

Yes ESS gained half cent to finish on 46.5c. Our volume was on the lower side of average, just over 2m shares traded. There was a good attempt made today to get out of the zone, but momentum could not be kept. May need another push to get to 50s

ASX Li stocks were mixed. Most of the big stocks had small declines - institutional playing it safe. There were others with some good jumps like FRS, QXR and WR1 gaining over 20%. This helped the average gain across 54 stocks to be 2.5%.

Overnight US Li stocks were mostly flat.


What next -

Yesterday US markets opened green as I was expecting as a sideways movement to make up for previous red. Couple of economic data that came, around PMI and jobs, were not favourable and indices had a decline. SP 500 lost 0.4% to finish at 3856. ASX was directionless for the whole day, finally finishing in a slight green.

SP 500 yesterday made another attempt at 3900 level I have been talking about. It did go up to 3911 and also crossed recent high of 3905, but economic data pushed it back. The lower level to hold is 3780 otherwise it could go much lower. Upper level is to cross 3900 again and possibly attack 4100/4150

The 10 year yield was rapidly declining at open falling nearly 4% at one stage, but reversed on economic data - we lost a good bullish data there. Same thing with dollar index, that too was going in right direction for some time. The Volatility index VIX has did fall slightly, still under 26 - one of the indicators to have kept the bull indicator alive.
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From a chart perspective its not looking great, especially around divergences - High yield bond make lower high, SP 500 higher high, Transportation index not keeping pace with DOW. Also, Nasdaq has still not participated in the rally - which is a risk-on index, many feel a rally led by DOW is not sustainable. On the flip side, SP 500 is still within striking distance of 3900 and it will still be considered a bullish run till its here. Unfortunately most of the readings I have done, the analysts are neutral to negative - most feel that Powell will be hawkish and there may a be a large sell off.

Personally I have held to my trading stocks. After reading/listening to all those analysts, I was not feeling confident. Few reasons I continue hold -

• SP 500 still around 3900,
• Although indices have increased 10-15% most resource stocks have made only small gains. So if any adverse condition, they may not fall much as well
• Many of the analysts have been wrong in this turbulent year
• Its a binary event tonight, although odds are not good there is always a chance that Powell may not be very hawkish, especially taking into account mid-term elections

So what will happen tonight? Another binary event equivalent to a toss. Odds favour bears but I feel Powell may be careful with his words - so although he may not say anything good, but will not crash the market once again as he has done previously, although he is well capable of doing it again. I still feel we may see 4100/4150 as part of this rally, though last 2 days and some economic data have dented that run a little bit. Will that happen? Lets hope so. All the best