Thursday, December 18, 2014

NASDAQ poised to test whether the bounce is real

The outsize bounce of NASDAQ on Wednesday was awesome, but was it real and will it stick, or was it just a traditional short squeeze rally fueled by "forced" short-covering when "stops" were breached and the shorts will return with a vengeance soon enough, or was it due to more hedge funds switching from "risk off" to "risk on"? Today, the market will take a shot at testing the assertion that the short-term downwards trend was really just trading within a wide, loose range or just the start of a more massive selloff or outright correction.

NASDAQ futures are up very sharply, indicating a sharp pop at the open, but as always, it is an open question whether people will pile on with more buying after that pop or retain or switch back to a "risk off" bias and sell into that massive rally at the open.

Short-sellers who had been forced to cover yesterday will be anxiously awaiting a new, higher reentry price to "put their shorts on" again. They will get that opportunity today, for sure, but if the rally turns out to "have legs", then they will be quickly forced to "take their shorts off" yet again. Rinse and repeat.

I'll be looking at the possibility of selling some of my recent dip purchases at 5% gains.

Overall, I remain heavily bullish, with heavy bets on all of the technology companies with bright futures, with cash reserves to take advantage of short-term dips.

I am seriously wondering if Fed Chairperson Janet Yellen may have put the final nail in the coffin of the psychological bear market in oil through her repeated use of the magic word "transitory." Oil (OIL) has a two-day rally going, looking to extend that for a third day, but brief rallies occur all the time within bear markets. Furthermore, it could well be that we are in a longer-term bear market for oil in that we may not head over $100 again. The medium-term market will be where all the interesting action will be - $40 vs. $80.

-- Jack Krupansky

Wednesday, December 17, 2014

NASDAQ poised for another attempt to bounce, but will it finally stick??

Superficially the NASDAQ selloff on Tuesday was quite disheartening, being more than a full percent and breaking down below the technical support at the level of the September peak in the vicinity of the psychological 4600 level. No good news there. But, it did have the feel of yet another "throw in the towel" session. And it did have dramatic intraday volatility with a strong foray into positive territory which suggested a significant divergence of sentiment as to whether the recent mini correction was finally reaching selling exhaustion. Clearly the answer yesterday was quite mixed. Today, we will see if on more careful overnight consideration market participants will maintain a rather "risk off" bias or indeed shift more to a more positive "risk on" bias. The latter shift would reverse the short-term downward trend back to a trading-range trend within the current wide and loose trading range between 4600 and 4800.

Breaking below technical support is usually a very bad thing, technically, but I have seen a number of occasions where a superficial break down is too tentative and appears to be more of a very short-term trading action as opposed to longer-term speculators and true buy-and-hold investors actually dumping long positions. Today we may see if that is the case. IOW, we could see a further breakdown, but if it too is more by short-term technical players, then we could see it quickly reverse in the coming days.

NASDAQ futures are up moderately sharply, indicating a moderately sharp bounce at the open, but whether it sticks remains to be seen. People may pile on and kick off a decent short-covering rally, or... they may sell into the rally and extend the recent selloff.

I'm hoping that today I will find out whether Fidelity is finally going to resolve my recent dispute to my satisfaction. I see some positive signs in my account, but have not yet gotten an official call from them. The local branch manager energetically volunteered to intercede on my behalf yesterday and his efforts may have turned around a very bad situation.

Oil? Damned if I can discern where it's headed next in the near term. I bought more Oil (OIL) when futures got near $55 and will buy more when they get near $50. Yesterday saw a nice bounce, but whether there will be positive follow-through is anybody's guess.

I bought more Twitter (TWTR) and Tesla (TSLA) on their dips.

-- Jack Krupansky

Tuesday, December 16, 2014

NASDAQ to test support for trading range

NASDAQ briefly tested its support at the September peak, but bounced. Today, traders will attempt to test that support more vigorously.
 
NASDAQ futures are down sharply, indicating a big dip at the open, but whether that dip expands to a deeper selloff or quickly leads to a recovery bounce is not preordained in any way. As always, it all depends on how the hedge funds are shifting their bias, either a more negative "risk off" or a more positive "risk on". Traders can and do express a lot of noisy sentiment, but frequently do not reflect the underlying sentiment shifts among those with deeper pockets.
 
All of the current market activity or angst and anxiety is mostly exaggeration for the purpose of boosting trading and profiting from short-term market swings. Nothing for any serious long-term investor to worry about, and more of an opportunity to pick up stocks at a cheaper price.
 
Meanwhile, I'm busy opening new accounts at TradeKing and preparing to move all of my Fidelity business to TradeKing as a result of an unresolved dispute with Fidelity. I've played with a TradeKing account since February. It's not as fancy as Fidelity, but I don't need all of the stuff that Fidelity does anyway (and none of the headaches!) and would prefer cheaper trades and a simpler business model.
 
-- Jack Krupansky

Monday, December 15, 2014

NASDAQ poised for a bounce, but will it stick?

First, see my previous post from Saturday for additional commentary.
 
NASDAQ futures are up sharply this morning, indicating a decent pop at the open, but the question is whether this bounce will stick and kick off further advances during the day or whether it will be yet another "dead-cat bounce" where hedge funds sell heavily into the rally and we see the gains from the open evaporate as the day goes by. It's 100% a question of whether any significant fraction of the hedge funds switch to a "risk on" bias or whether the majority continue to pursue a "risk off" negative bias. We can't know in advance what they will do, so we will have to see as the day progresses. We could also see a large gain due to the opening pop kicking off a short squeeze where hedge funds are forced to buy to cover short positions. Unfortunately, if that does happen, these guys will simply wait a day or so and then re-open their short positions  at a more attractive entry price, and then we could see any gain from today evaporate.
 
For now, NASDAQ is in a wide trading range. We are at the edge of a mini correction, but a decent rally today would send NASDAQ back towards the other, upper edge of the trading range.
 
Last night I was expecting to buy more Oil (OIL) and Tesla (TSLA) at the open, but I probably won't if the opening pop is more than minor.
 
-- Jack Krupansky

Saturday, December 13, 2014

NASDAQ on verge of a mini correction within loose trading range

NASDAQ on the edge of what I call a "mini" correction (a decline in the 3-5% range), closing at a 2.88% decline from its recent closing peak and 3.27% below its recent intraday peak. We do have to be careful about interpreting market action on a Friday, since short-term speculators have a tendency to close out positions ahead of a weekend when anything can happen. We'll have to see whether the selloff on Friday "has any legs" on Monday and Tuesday.
 
Friday's trading was actually quite interesting, with a deep dip at the open followed quickly by sharp recovery bounce that erased almost all of that dip, followed by volatile trading with only modest to moderate losses most of the day, and deep losses only in the last half-hour of trading. That's too much volatility to indicate a reliable trend. And too much lingering bullish sentiment to indicate an outright bearish bias.
 
The 4600 level will be a key psychological test. The September highs were just below that level. Whether traders try and succeed at pushing below that level remains to be seen.
 
It's probably just as likely that NASDAQ will bounce and reverse to trade upwards within the 4600 to 4800 trading range.
 
We have a week and a half of trading left before the holidays kick in. It's not so clear whether hedge funds will want to be heavily short heading into the holidays.
 
I continue to follow oil a bit, but there is way too much noise in the marketplace to discern any clear signal. I mean, sure, we could easily see $55 oil this week, but I wouldn't bet too strongly either way. I strongly suspect that most of the negative news is now priced and even greatly overpriced into the market. I'll consider buying a little more Oil (OIL) since it is close to a 5% decline from my last purchase.
 
I didn't get any IPO allocations on Friday, but I did open small positions of HortonWorks (HDP), New Relic (NEWR), and Workiva (WK) as soon as they started trading. I had opened positions in Lending Club (LC) and Momo (MOMO) on their IPOs on Thursday. I think I'm done with IPOs for now. These are long-term positions. I may also open additional positions to trade on dips.
 
-- Jack Krupansky

Friday, December 12, 2014

NASDAQ remains mired in volatile trading range

Correction? Hard to tell! Seriously, NASDAQ has such intense volatility with wild swings that no significant trend is emerging so far, other than a moderate trading range. Sure, there is clearly a lot of negative or "risk off" sentiment among the hedge funds, but just as clearly it is not quite enough to push NASDAQ into a serious correction, at least so far. At best (worst), we are seeing a decent amount of "consolidation". So, expect continued volatility until the balance between the "risk off" hedge funds and the "risk on" hedge funds becomes a bit more imbalanced, with one clearly more dominant. Don't hold your breath though – as the old adage (Keynes?) goes, "the market can remain irrational longer than you can remain solvent."
 
Anxiety and uncertainty over the price and trend of Oil is certainly adding to the volatility, but is just as certainly not the only factor. The main problem we have is that although the U.S. economy continues to recover and continues to outpace most of the rest of the world, it is still uneven enough that ADD-afflicted Wall Street traders and short-term speculators simply can't deal with it and start bouncing off the walls (maybe that's why they call it "Wall" Street?!!).
 
NASDAQ futures are down moderately, indicating a moderate dip at the open, but we have no clear indication whether after the dip we will see primarily piling on for a steeper selloff or a fair amount of buying on the dip. But volatility is certainly in the cards.
 
I did manage to get some IPO shares of Lending Club (LC) through their Directed Share Program (DSP) with Fidelity since I have been participating in Lending Club by investing in loans for over five years now. I also bought more shares on the open market. I picked up shares of Momo (MOMO) on the open market after its IPO started trading as well.
 
I did not get any allocations for the IPOs of HortonWorks (HDP), New Relic (NEWR), or Workiva (WK), but I will open small positions when they open for trading this morning.
 
I did buy more Oil (OIL) yesterday and will buy more if it dips another 5%. Exactly where the "bottom" is I can't know, but I do know good value when I see it.
 
-- Jack Krupansky

Thursday, December 11, 2014

NASDAQ continues to struggle to find a trend

The intraday decline of NASDAQ on Wednesday mirrored the intraday rise of Tuesday, which essentially means that market participants are completely confused as to the true short-term trend. Stay tuned. We're probably just going though a little "consolidation", or maybe a "mini" correction (3-5%.)
 
NASDAQ futures are up modestly, indicating a modest "recovery bounce" at the open, but whether hedge funds follow through with any significant buying or sell into the rally remains to be seen. Any bounce might kick off a short-squeeze rally, but any bounce could just as well be a classic "dead-cat bounce" which could be followed by renewed selling tomorrow.
 
Still waiting for word on my IPO allocations, but either way I will be long Lending Club (LC) and Momo (MOMO) by the end of the day. Probably just small positions since IPOs frequently have dips before they stabilize. Tomorrow I'll pick up some HortonWorks (HDP), New Relic (NEWR), and Workiva (WK) on their IPOs.
 
I may pick up some more Oil (OIL) on its recent dip.
 
-- Jack Krupansky

Wednesday, December 10, 2014

NASDAQ still confused about short-term trend

NASDAQ had a nice bounce on Tuesday, recovering more than half of the losses from Monday and bouncing sharply from a steep sell-off at the open, an intra-day swing of 82 points. Rather impressive. But... the moderate rise for the day may simply have been an overreaction to the overreaction of of the negative sentiment at the open. All of this points to a market that is still mightily confused about its short-term trend. It also has a name: volatility. And it all amounts to a traditional trading range. NASDAQ stayed above its closing level of November 12th, and is now sitting a fair bit above the middle of its range since then.
 
A correction? Well, sure, a correction is always possible, but the current activity is more of a "consolidation" in a trading range combined with short-term anxiety of traders caused by a perceived slowdown in China and uncertainty over where the price of oil is headed next. Traders can indeed give us lots of volatility, but ultimately they can't take us out of a trading range – it's up to the hedge funds and other short and medium-term speculators to do that.
 
NASDAQ futures are down modestly, indicating a modest dip at the open and that traders probably feel that the pop at the end of Tuesday may have been more due to short covering than enthusiasm for opening long positions. But where the rest of the market participants will take NASDAQ after that opening dip is unknown – and frequently not correlated well at all with pre-open futures.
 
Tonight is IPO pricing for Lending Club (LC) and Momo (MOMO). Whether I am allocated shares of the IPO though Fidelity or not, I will be owning those stocks shortly after they open for trading tomorrow morning.
 
And tomorrow evening will be pricing for HortonWorks (HDP), Workiva (WK), and New Relic (NEWR). I have indications for the first two, but Fidelity isn't participating in the IPO of the latter. Again, either way, I'll be an owner on Friday morning.
 
My IPO positions will be fairly modest and long-term holds, but I also have the expectation that I will be increasing those positions on any significant dips over the next year or so.
 
-- Jack Krupansky

Tuesday, December 09, 2014

NASDAQ contemplating a correction of some sort

Sentiment has suddenly turned very ugly for NASDAQ and the rest of the stock market. I'm not so sure that it is all about China and oil and other weaknesses outside of the U.S. so much as it is that traders and short-term speculators will frequently use any and every available excuse to justify whatever trend they want to pursue, as well as the penchant of traders and short-term speculators to exaggerate short-term news far beyond its true long-term significance. The market had been looking a bit "toppy", so some sort of correction was semi-reasonable. Whether it will turn out to be a 2-5% "mini" correction or a full 10% correction remains to be seen. And whether an actual correction really materializes is not a slam dunk even in the face of the fiercely negative (short-term) sentiment.
 
In truth, NASDAQ is still above it's level of just before the holiday week, so technically we are simply in a trading range, with the holiday week being an aberration. So, the "correction" may simply be an attempt to fully erase that aberration.
 
Confusion over the trend for the price of oil certainly adds to stock market anxiety even though it is probably a net-net neutral since consumers are such a major factor in the economy. I did buy some more Oil (OIL) yesterday. I'll buy more if it falls another 5%, but for now it is is a loose trading range.
 
NASDAQ futures are down sharply, indicating a big dip at the open, but exactly what bias the hedge funds are and will be taking remains to be seen. They could sell in a very big way, or... they may have already sold and may be looking to buy on the dip.
 
Oil futures are actually up modestly, but we'll have to see whether trading follows or reverses that trend as the day progresses. I gather that there is a rather fierce divergence of opinion as to whether oil is undervalued or overvalued.
 
-- Jack Krupansky

Monday, December 08, 2014

NASDAQ poised for a test of its trend

NASDAQ did manage to recover a fair amount of it's big sell-off from last Monday as the week progressed, but now its time to see how durable those gains are. Futures are down moderately as traders bet that a fair chunk of those recovery gains will quickly evaporate, but we will have to see if that turns out to be the case. Bets by traders frequently fail to align with changes in the risk posture of the hedge funds. It is not unusual for hedge funds to wait for traders and other short-term speculators to bet too much on a particular market trend and then bet the opposite and force a reversal of the short-term trend. We still don't have a solid short-term trend in place after the holiday week.
 
Futures may be down based on perceived weakness in China or anxiety about weakness in the price of oil. I would simply note that the U.S. stock market is primarily based on the health of the U.S. economy, which is still cruising along and incrementally improving with every passing month, albeit at too slow and uneven a pace for ADD-afflicted Wall Street traders and short-term speculators to get excited about. Oil prices are a mixed bag, with lower prices helping consumers, but reducing investment as well, so the net-net is probably a wash.
 
I still have a modest position in Oil (OIL). I'll pick up some more if it declines by 5% from my purchase price. It's near-term trend is not terribly clear other than a lot of ugly, negative, cynical sentiment, which is clearly a negative, but sentiment doesn't always translate cleanly into actual market activity.
 
I'm still getting ready for the IPOs coming later this week. Whether I will be likely to get any shares in the actual IPOs is not so terribly certain, so I expect to be buying shares in the open market. I'll also hold back a fair amount of my cash in anticipation of buying on any inevitable dips that occur in the weeks and months following the IPOs.
 
-- Jack Krupansky

Friday, December 05, 2014

NASDAQ poised to take a shot at establishing its short-term trend

NASDAQ has certainly been volatile this week, really struggling to "find its groove", whether that be up, down, or sideways. A Friday is not a great day to set a trend, but given the nature of last week with the holiday and the selloff on Monday, it may be the best shot this week for NASDAQ  to set its new short-term trend for the month.
 
A decent jobs number this morning should help to underpin the market.
 
NASDAQ futures have been volatile, with traders not quite sure whether a good jobs number is a positive or negative (keeps Fed on track to raise rates sooner), so we could see a rather lackluster open. And, of course, the market will then take on a mind of its own and go where traders have no clue.
 
Today is a Friday, when a good fraction of short-term market participants may tend to close out positions ahead of the weekend when anything can happen, and since NASDAQ has been shaky lately I suspect a lot of people have been trying to play the "short" side of the market, so for them to close positions means they will have to buy, which would be a positive for the market.
 
I'm still working on my plan for the three IPOs I'm interested in next week. That, and always watchful for the irrational dips that Wall Street continues to offer me.
 
-- Jack Krupansky

Thursday, December 04, 2014

NASDAQ still struggling to find its new trend

NASDAQ has had enough time now to digest the Black Friday retail sales, the price of oil, and adjust for meaningless trading that occurred during the holiday week when most of the big dogs and heavy hitters were off partying, but no clear post-holiday trend has been established. Today will be the first clear day for the market to "find its groove." Unfortunately, tomorrow is a Friday, when a good fraction of market participants lighten up on positions ahead of the weekend when anything can happen, so it may be Wednesday before we see any significant progress on establishing a trend for December.
 
NASDAQ futures are up modestly, indicating a modest pop at the open, as traders are hopeful for an emerging "Santa Claus rally." Then, we'll see if traders have guessed the new trend correctly as the day proceeds. Their record of accurately predicting the trend is rather spotty to say the least.
 
I'll continue to look for any big dips of my favored stacks. I bought more Tesla (TSLA) and Amazon (AMZN) on dips yesterday.
 
Mostly I'm just getting ready for IPOs coming up next week.
 
-- Jack Krupansky

Wednesday, December 03, 2014

NASDAQ continues to stumble through post-holiday indigestion

I'd give NASDAQ another day or two, if not the whole week, to finish digesting the post-holiday economic data and to get over it's holiday "financial coma." Sure, a disappointing Black Friday is now ancient history, but online retail sales have yet to be fully digested. The price of oil seems to be stabilizing, but that remains to be seen as well. Overall, the U.S. economy remains in semi-decent shape and continues its lackluster incremental improvement, which is good for the long term, but leaves an ADD-afflicted Wall Street anxiously grasping for straws with every news report.
 
Monday's selloff erased the gains of the holiday week, and Tuesday's recovery bounce earned back half of that, but could have been a dead-cat bounce, so we need a couple more days  for the market to sort it out. NASDAQ futures are fluctuating very close to the flat line, indicating a relatively flat open and that traders have no clue as to where the market is headed next. We'll see soon enough.
 
The Lending Club (LC) IPO is coming next week, currently expecting pricing next Wednesday evening (December 10, 2014) in the $10 to $12 range. I registered my "indication of interest" with Fidelity last night through the DSP (Directed Share Program) that they have arranged with Fidelity for those of us who have been participating in their loans. I've been funding Lending Club loans for five and a half years now, and my effective rate of return is 9.50%. It will be interesting to see if the stock can deliver a comparable rate of return over the years! The DSP is limited to 350 shares, so I have already registered a separate indication of interest with Fidelity outside of the DSP. And, there is certainly no guarantee that I will be allocated all or even any shares at all, so I am ready to buy in the open market as well.
 
I continue to buy more Twitter (TWTR) as the hedge funds seem quite determined to push it down despite its continued dominance in its market niche and long-term potential.
 
My foray into Oil (OIL) is still positive, with the appearance that the price of oil may be stabilizing after it's sharp plunge during the holiday week. I'm sure it will be volatile and I plan on buying more if it dips another 5%. Ditto for Tesla (TSLA) and Solar City (SCTY).
 
-- Jack Krupansky

Tuesday, December 02, 2014

NASDAQ struggles to find a new balance

Most of Monday's sharp decline for NASDAQ occurred within the first 22 minutes of trading, with the market meandering on the plus and minus side of that level until the last half hour of trading. There was nothing really definitive there, other than a one-shot adjustment after the fake rally of the holiday week. Monday's decline erased all of the holiday week gains. So, now we are back to square one, waiting for any near-term trend to emerge now that all market participants are all back at their desks.
 
People will be digesting the online retail sales results of Cyber Monday, and trying to square good news on that front with the lackluster traditional retail sales results from last week, and trying to figure out what that implies for the rest of the holiday retail sales season.
 
NASDAQ futures are up moderately, indicating a decent recovery bounce after Monday's rout, but that could simply be a dead-cat bounce that could quickly run out of steam – or not. It will still take another couple of days for the market to rediscover its short-term trend.
 
I registered "indication of interest" for three IPO's with Fidelity, Lending Club (LC), HortonWorks (HDP), and Momo (MOMO).
 
I may make some additional dip purchases today.
 
-- Jack Krupansky