Monday, May 19, 2014

Next round in the battle for the NASDAQ trend

NASDAQ stock futures are down moderately this morning, indicating that traders think that this market deserves a negative bias. But the simple truth is that futures frequently fail to indicate the true sentiment of the people with the real money who are getting ready to make bets in the market throughout the day. The open question today is whether short-term bullish speculators are willing to buy into any opening dip for NASDAQ. But even if they do, the next open question is whether there is any significant follow-through, or whether the more bearish short-term speculators in turn sell into any recovery rally from any dip.
 
There is no economic or business news from this weekend or overnight that would give the overall NASDAQ market a negative tone. Sure, there is some merger and acquisition news, but that doesn't affect most NASDAQ companies.
 
Even Ukraine seems a little more stabilized this morning, so that is not a source for the negative tone of NASDAQ futures.
 
There is some chance that the bearish speculators will try to take another shot at pushing NASDAQ down, maybe try for a 50-point decline, or maybe even another 100-point decline – and they do have the ability to do so, but the big open question is whether they have the will to do so, or if they are shifting to a slightly more bullish bias in response to the outright resilience of NASDAQ over these past couple of months.
 
Once again, it will take a couple of days to get a better sense of how the week could play out.
 
It is also worth noting that Memorial Day is next Monday, so a lot of market participants may take off early for an even longer weekend, and in a lighter-trading market the moves can be exaggerated and not necessarily indicative of how the market will play out in the week or two following the holiday.
 
-- Jack Krupansky

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