Friday, May 16, 2014

NASDAQ still in a holding pattern

Traders did in fact "fill the gap" yesterday, pushing NASDAQ down and fully erasing Monday's big pop, leaving the index essentially right where is was at the close last Friday (3 points lower, actually.) The good news is that the intraday low was not a new short-term low compared to the intraday low of last week. Further, NASDAQ did rally 30 points from the intraday low into the close, suggesting either some dip buying or that half of the intraday decline was simply day traders who shorted the market and then had to close out their short positions before the close.
 
Where does that leave us? Stuck in a relatively narrow trading range of 4000 to 4200. So, the bad news is that we're stuck in that range, but the good news is that the bears haven't been able to break down below it, try as they might, for as many times as they have tried.
 
The other way of looking at this is that NASDAQ is "building a base", establishing the 4000 to 4100 level as a solid base or "support" for an advance. But... that's not to say that the advance might come any time soon, or that the bears might not still gather enough energy to finally break below that 40000 level.
 
Today is a Friday, so short-term bullish speculators will tend to close out any lingering long positions ahead of the weekend, when anything can happen. OTOH, these lower levels make dip-buying attractive.
 
Futures are currently pointing towards a lower open, but all too often we see futures pointing in the opposite direction of how the trading session plays out later in the day, so... stay tuned.
 
There are a few stocks that I am considering for purchase on the dip – YELP, DATA, AMZN, EXPE, AKAM.
 
-- Jack Krupansky

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