Monday, May 05, 2014

The battle over the NASDAQ trend continues

This week it appears that the bearish short-term speculators are shifting into another gear. Once again we start with an underlying economy that is showing reasonable strength and signs of it picking up steam, but... the bearish short-term speculators instead focus on short-term transitory factors such as anxiety over Ukraine, anxiety over China growth rates, the proverbial "sell in May and go away" trading pattern, and other random anxieties. So, trading starts with futures pointing to a moderate decline. The big question is how the rest of the market participants respond – do they jump on the bearish bandwagon, or do they buy the dip. One day doesn't mark a trend, so it may be Wednesday or Thursday before we have some clarity on the near-term trend for NASDAQ.
 
Short-term speculators always like to test any emerging trend, or to see if an apparent trend is merely half of the side to side movement in a trading range. Good for them. It adds to market volatility and commission profits for the brokers, and masks any actual trend in the short-term.
 
Meanwhile, it was a reasonably good sign that NASDAQ did not suffer a major selloff last Friday, and actually had a modest gain for the week.
 
I suspect that we will see more of the same this week, after we get past the opening positioning today to start the week.
 
-- Jack Krupansky

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