Sunday, April 13, 2014

NASDAQ below 4,000?

NASDAQ is poised just a hair under the psychological 4,000 level, at 3,999.73. That's very slightly above the closing level of 3,996.96 on February 3, 2014, which would be a "support" level. NASDAQ had dipped down to 3,991.64 on Friday before rallying a little into the close. The closing level of 3,998.40 on December 12, 2013 also provides technical support. None of that in any way means that bearish sentiment is exhausted, but there are a lot of traders and short-term speculators who do make decisions based on these kinds of levels and support.
 
The closing levels of 3,921.27 on November 20, 2013 and 3,857.33 on November 7, 2013 provider deeper support that is closer to the 10% correction range.
 
The NASDAQ peak for this bullish cycle was at 4,371.71. A 10% correction would amount to 437.17 points, which would be at the 3,934.54 level.
 
I'm making a short list of stocks to start buying at these levels. I'll buy incrementally, maybe two to five positions a week since there is no sense of certainty for how long this mini-correction will last. It could graduate to a full-blown correction on Monday – or not. We could still see one or more additional dead-cat bounces before the bearish short-term speculators reach selling exhaustion.
 
-- Jack Krupansky

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