Friday, May 23, 2014

NASDAQ drifts into the long holiday weekend

NASDAQ futures are showing a modest upwards bias and NASDAQ is up modestly for the week, but... It remains to be seen whether bearish market participants decide to sell into any early rally, or whether there are enough bullish market participants to extend this week's mini-rally. It's also Friday, so a lot of short-term speculators will exit positions ahead of the weekend, when anything can happen (including a presidential election in Ukraine.) And the fact that this is a long holiday weekend only intensifies the desire of short-term speculators to not be overly exposed to the market. The flip side is that fewer people were exposed to the market this week anyway since that is usually what happens in the week ahead of a long holiday weekend.
 
In short, flip a coin over whether NASDAQ extends its mini-rally today or consolidates a little (or even more than a little.)
 
The bad news is that none of what happens this week will in any way influence the trading bias when the rest of the market participants get back from their holiday. If anything, a higher level for NASDAQ will only increase the likelihood of a bearish attack next week.
 
The bottom line is that NASDAQ remains in a relatively narrow trading range, and probably will remain there until any lingering anxiety over the "sell in May and go away" seasonal trading pattern has evaporated, as well as the lingering echoes of the winter and Q1 sluggishness. I say give the market another 2 to 3 weeks, and then we will see a more clear trend as people begin to focus more seriously on Q2 and beyond.
 
-- Jack Krupansky

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