The old saying is that "a bull market climbs a wall of worry", and right now people are starting to become more than a little antsy about the global economy and the degree to which NASDAQ may be overvalued. That said, the U.S. economy is still plugging along at a semi-decent clip and continuing to recover incrementally, albeit at too moderate and uneven a pace to get Wall Street terribly excited – but that may be a good thing since Wall Street euphoria always ends badly.
The big question right now is what fraction of short to medium-term speculators are still open to maintaining and increasing their bias towards "risk on". Once that group starts to peter out, NASDAQ's upwards momentum will peter out as well, until we hit the point where a sizeable fraction of those short and medium-term speculators begin to jump ship in numbers large enough to bend the arc of NASDAQ into a downward trend again or at least some consolidation and range trading. Unfortunately, there aren't much in the way of numeric market indicators to judge those trends except after the fact.
NASDAQ futures are down modestly, indicating a modest dip at the open. The question is whether speculators pile on and turn that dip into a rout and sell-off or whether they buy the dip and kick off another short squeeze that pushes NASDAQ to yet another high for the year.
NASDAQ pushed above the psychological 4700 level briefly on Thursday, but there was too much resistance. NASDAQ still managed to close up for the day every day last week, so clearly there is at least some upwards momentum in play. How long that momentum lasts before some significant consolidation remains to be seen. I'm sure that traders will seek to test that 4700 level of resistance in the near future. Whether deep-pocket speculators (e.g., hedge funds) will use that level as a trigger for reverting from a "risk on" bias to more of a "risk off" bias remains to be seen.
For now, NASDAQ seems poised to both grind higher but with growing odds of some consolidation along the way.
Ultimately it will be the health and strength of the U.S. economy that will drive interest in (U.S.) stocks. The rest of the world is still slogging through the aftereffects of the financial crisis and at a slower pace than the U.S., but eventually Europe will work through their own mess and then join the U.S. on our superior growth track. Hey, even Greece managed to post positive GDP growth after all of their troubles.
-- Jack Krupansky