NASDAQ still holding up in face of consolidation attempts
Bearish traders and speculators have made a number of valiant attempts to push NASDAQ back down, but still haven't managed to succeed. That's not an absolute bullish sign, but it is promising. NASDAQ has broken out of its narrower trading range of 4,000 to 4,150, which is a good sign, but momentum is not guaranteed.
NASDAQ is still well below its recent peak of 4,358 on March 5, so there is no immediate pressure of any big test to determine whether NASDAQ will remain it its larger trading range or actually break out for a new near-term high – and stay above that level for more than a few days.
We're in the last trading day of May, so the "sell in May and go away" seasonal trading pattern has its last chance today, but even with a 100-point drop, NASDAQ would still be positive for May. This seasonal trading pattern could persist into the first couple of weeks of June before it is absolutely behind us.
It's also a Friday again, so short-term bullish speculators could dump their positions ahead of the weekend, when anything could happen. The flip side is that we could start hearing more positive news about Q2, so dumping bullish positions could be a bad move. Still, "taking a little money off the table" is a time-honored Wall Street trading tradition, so we'll have to see how the day plays out.
NASDAQ futures have a modestly negative bias, suggesting that traders feel that the recent mini-rally may be running out of steam, but that's not a reliable indicator of how longer-term speculators and real investors will trade as the day goes along. If the market does open with a dip, it will be interesting to see how many market participants buy the dip.
-- Jack Krupansky