Monday, June 30, 2014

NASDAQ poised to extend or consolidate its breakout

NASDAQ has sort-of secured a breakout above the near-term March peak, albeit a sloppy and still weak one. NASDAQ is still a little less than 1% above the March peak. I'd like to see a clear 1% to 2% for at least two weeks before calling an all clear.
The psychological 4,400 level is right in front of us. Pushing above it could either kick off a true breakout or cause some consolidation to go back and test support a bit more before the real breakout.
On the other hand, the nature of the recent rally has been more of a "climb the wall of worry" nature, so we could simply see some marginal, incremental gains and losses for a considerable period of time.
Futures are up modestly, indicating a positive bias, but once again we will watch carefully to see if short-term speculators either pile onto a rally, sell into any rally, or buy any dip. In other words, whether they are taking a "risk on" or "risk off" bias.
-- Jack Krupansky

Friday, June 27, 2014

NASDAQ hangs in there

NASDAQ fought off a bear attack at the open on Thursday, falling 29 points shortly after the open, but then steadily clawing back all but a single point of those intraday losses by the close. Rather impressive if you ask me. Still, we aren't seeing a lot of conviction to secure a clean breakout above the March near-term peak. We need to see a full 1% to 2% above that near-term peak to start feeling some comfort at these levels.
NASDAQ futures are down moderately this morning, suggesting that traders expect some profit-taking at the open, but once again what we really want to see is whether the bears pile on to an early dip for a true rout, or whether the bulls buy any dip.
It's Friday again, so short-term speculators will be prone to closing positions (long or short) in advance of the weekend, when anything can happen. But, some of the selling after the open on Thursday, as well as the recovery through the rest of the day may have been these short-term speculators closing out positions a day early since trading can be so slow in these lazy days of summer.
I just got lucky – yesterday, on a whim (and after a lot of thought over the months) I decided that Nike (NKE) was cheap enough for me and bought some call options, and now the stock is popping this morning. Actually, I realized recently that one of my "mistakes" over the past year was not acting promptly when I did come up with a good idea.
-- Jack Krupansky

Thursday, June 26, 2014

NASDAQ struggling with a clean breakout

NASDAQ has managed to have four closes above the March near-term peak, but still not in a decisive manner, still less that 1%. The good news is that NASDAQ hasn't turned and run back down with its tail between its legs (as it almost tried to do on Tuesday, with a 50-point intraday decline.) But this is where we are, a classic "bull market climbing a wall of worry" and without any clear and compelling conviction.
Futures are up modestly this morning, suggesting a positive bias, but the question remains whether sidelined money will sell into any rally or buy on any dip.
The real test for NASDAQ now is whether or when it can manage a full 2% close above the March near-term peak, and to do it for at least two weeks to prove that it is sustainable. That would put us near or above the 4,450 level.
Iraq? Still a mess, but it always was a mess and always will be a mess, so that really isn't any actionable news.
We still have lingering ghosts from the bad winter, but they are just echoes now, not a preview of things to come. The stock market reacts to news on a daily basis, but longer term it moves based on expectations of where the economy will be in six to nine months. Some short-term speculators are actually react positively on any news of economic weakness which they figure will keep the Fed on a more accommodative stance for a longer period of time, since cheap money is gasoline for the engines of Wall Street.
I remain bullish and optimistic for the medium and longer term, but acknowledge the risks of the occasional pothole as the market slogs forward.
-- Jack Krupansky

Wednesday, June 25, 2014

NASDAQ poised again either for breakout or consolidation

Was the moderate NASDAQ decline on Tuesday due to anxiety over Iraq or a little profit-taking or the end of the recent rally and the first leg down for a new correction? Unclear. NASDAQ started out great and seemed to be scoring an actual breakout, but in the early afternoon headed straight south, falling 57 points from the intraday peak that was only fractionally below the 4,400 level before recovering modestly into the close. For now, the decline really amounts to only some modest consolidation as part of a decent run, so there is no real concern there, but the big unknown is whether some of the major short-term speculative money has decided that the rally has run about as far as it can and changed their bias from "risk on" to "risk off." We'll just have to see how things play out over the coming days.
NASDAQ futures have a modestly negative bias this morning. The big question is whether sidelined money decides to pile on to any negative bias and seek greater consolidation, or decides to buy the dip and continue the underlying rally.
The real bottom line is that the U.S. economy continues to incrementally improve, which will underpin a stock advance longer term, even as we occasionally stumble into these potholes.
-- Jack Krupansky

Tuesday, June 24, 2014

NASDAQ sets a new intraday high above the March peak

BTW, NASDAQ just set a new intraday high of 4,372.86, above the near-term March intraday high of 4,371. Not terribly meaningful, but these things can have psychological effects.
The real bottom line is that NASDAQ is showing a lot more resilience than people have been giving it credit for. Get ready to hear people chattering again about "a bubble."
-- Jack Krupansky

NASDAQ grinds higher

NASDAQ actually moved a tiny bit higher on Monday despite a negative bias in futures at the start. It actually closed virtually exactly where it opened for the day, less than a point higher than Friday's close. This is not great news per se, but is good news compared to taking a loss.
NASDAQ remains poised for either a true breakout (like 1% or more) or consolidation. As much as the bearish speculators would love to pounce and push NASDAQ down, they have been unable to do so.
The problem right now is that neither the bulls nor the bears are ready to act with any passionate conviction. That leaves it to mutual fund managers and even retail investors to weigh in, either by trickling in more money or taking some profits.
Part of the volatile market action is caused by rotation, as money managers sell some stocks and shift the money into other stocks that either have more momentum or are undervalued.
Whether NASDAQ breaks out to a 1% or even 2% gain above the March peak or consolidates by a couple of percentage points may be a matter of flipping a coin. It's just as likely that NASDAQ could continue to grind fractionally higher or consolidate fractionally (less than 1%, like 5 or 10 or 20 points) a day, especially now that the slow-trading of summer is upon us.
In any case, an incrementally improving economy underpins an incrementally improving sock market.
Geopolitical concerns add to market volatility, but not for the overall trend beyond the news of the day and week. As they say, it's the economy, stupid.
-- Jack Krupansky

Monday, June 23, 2014

NASDAQ poised for a breakout... or consolidation

The good news is that NASDAQ has closed above the March near-term peak for three days in a row. That's impressive. The bad news is that momentum has petered out. Lack of momentum can be the death of any rally, but sometimes a rally simply takes a breather or consolidates before continuing. So, NASDAQ remains poised for either a breakout or further and deeper consolidation.
NASDAQ futures are modestly negative, indicating that traders are biased towards consolidation, but not with a lot of conviction. What remains to be seen is what bias sidelined money has, which will play out throughout the day, well after the open.
My biggest concern remains that a lot of short-term bearish hedge fund money may be sitting tight, waiting for a more clear sign that the NASDAQ recovery rally has run out of steam before pouncing with a vengeance.
I'm also concerned that a lot of the money in the recent recovery rally has been short-term bullish speculative "hot" money that has no long-term conviction, so it could reverse from "risk on" to "risk off" at a moment's notice.
Meanwhile, my bias remains bullish for the long term, even as I take a little money off the table as the advance proceeds, to have reserves to buy on dips as opportunities arise.
-- Jack Krupansky

Friday, June 20, 2014

NASDAQ remains poised for breakout or consolidation

NASDAQ did consolidate a little on Thursday, but managed to bounce back from stronger dip in the middle of the day. This did not amount to any real consolidation. The good news is that even with the slight dip on Thursday, NASDAQ has now closed above the March peak for two days in a row. Now the question is how long it can extend that streak and whether it can score a more convincing breakout from this level. Volatility is still to be expected, along with the possibility of some big down days if the flow of money into stocks weakens in any way on a daily basis even if the money flows persist on a longer-term basis.
Once again it is a Friday, when short-term speculators are prone to close out positions ahead of a weekend when anything can happen. Iraq is still simmering (as is Ukraine), but not in a way that would mess with the relentless incremental improvement of the domestic U.S. economy.
It will be interesting to see how the market reacts to Oracle's (ORCL) mediocre quarterly report. Sure, some analysts were disappointed, but it all seemed par for the course to me. Oracle isn't on my buy list of stocks, so I'm not exactly anxious to buy it on a dip, but if the dip is big enough, the stock will be more attractive. If anything, this kind of stock action is more symptomatic of hedge funds desperate to find some fertile ground for short-selling since the overall market is heading against the interests of the bearish speculators.
-- Jack Krupansky

Thursday, June 19, 2014

NASDAQ hits new near-term peak, but no solid breakout yet

It's great that NASDAQ finally managed a new near-term peak, 5 points above the former near-term (on a closing level) peak of March 5, 2014. This is a very positive development, but... not quite a true breakout. Double tops and double bottoms don't guarantee a solid trend, and sometimes lead to reversals. So, the question of the day and week is whether NASDAQ can remain at these levels in a sustainable manner. A little consolidation would be fine, though.
It's worth noting that NASDAQ was down much of the day yesterday, and a lot of the late-day euphoria could well have been the rather dovish announcement from the Federal Reserve. In general, I usually say that it always takes at least a couple of days for the dust to settle after any Fed announcement. So, let's see where NASDAQ closes next Tuesday and Wednesday before drawing any conclusions.
Personally, I wouldn't conclude that NASDAQ has safely left the March peak behind until it tacks on another 2%, which would mean hitting the 4450 level and staying above that level for at least two weeks.
Futures are up modestly this morning, indicating that NASDAQ will start with a positive bias, but the question remains whether short term speculators have a net "risk on" or "risk off" bias, either building on pops and buying on dips, or selling into any rally and shorting any dips. Only time can tell. But short-term speculators can be rather fickle, riding the trend... until they suddenly reverse and drive the trend the other way. Let's see how long they ride the current bullish trend. Maybe we'll have a repeat of last summer, or maybe not.
The real wildcard here are mutual funds and retail investors. With the economy incrementally improving, maybe incrementally more retail investors will shift from bond funds to stocks and the mutual fund money managers will have no choice but to fund the stock market bull run. Maybe, or maybe not. The point is to be prepared for anything.
I'm fairly fully invested with only modest reserves at this stage, so personally I need to be taking a little money off the table as stocks move up, so that I have reserves to take advantage of the inevitable dips.
-- Jack Krupansky

Wednesday, June 18, 2014

NASDAQ remains poised for a new peak or consolidation

NASDAQ once again is poised either to breakout with a new near-term peak above the March peak (now over 3 months old) or... some consolidation or even to begin trading back down in its range. NASDAQ is only 21 points or 0.5% below that near-term peak (on a closing basis.) Of course, even if we do touch or exceed that peak, the open question is whether this will be a sustainable breakout rather than the end of a nice rally.
NASDAQ futures are up modestly this morning, suggesting a modestly positive bias for traders, but once again the question is whether speculators and investors build on a modest pop or sell into any rally.
NASDAQ has fully erased the dip from last Thursday, but remains vulnerable to even bigger dips, like 50 or even 100 points, as the recent rally "grows long in tooth" without staging the kind of breakout needed to establish a new short-term peak.
I had some Adobe (ABDE) call options, but... they expired last month, and now the stock is poised for an 8% pop this morning. Sigh. I violated my own rule about only buying options with at least 4 to 6 months duration. But, my Yelp (YELP) and Solar City (SCTY) call options have done quite well, so I can't cry too much.
-- Jack Krupansky

Tuesday, June 17, 2014

NASDAQ continues to stumble forward

Despite a start with a negative bias on Monday, NASDAQ managed to reclaim another chunk of Thursday's losses. Traders tried to push NASDAQ down during the day, and succeeded, a little, but it bounced right back. That's a good sign.
Traders are flip-flopping this morning with futures up and then down. No conviction either way.
The "testing" process will continue – if NASDAQ dips, we look to see if people are buying the dip, and if NASDAQ rallies, we look to see if people are selling into the rally.
whatever the emerging trend is, expect lots of volatility, volatility, and volatility.
With two days of modest rallying behind us, NASDAQ is once again poised within 1% of the March peak. And once again, NASDAQ is poised to either breakout above that peak, linger below it, or pull back and trade back down in the trading range.
The overall U.S. economic picture continues to be modestly bright, even if minor speed bumps, rough patches, and dark clouds pop up on occasion. The geopolitical picture is a bit messy, but nothing that the U.S. economy can't readily handle in stride.
I continue to be on the lookout for the potential for occasional 50 or even 100-point dips, but overall NASDAQ is being remarkably resilient, suggesting that the mini-correction of March and April is likely behind us for good.
And I am really on the lookout for any silly, mindless 10% dips on solid stocks. Those are my preferred investment right now.
-- Jack Krupansky

Monday, June 16, 2014

Traders continueto test NASDAQ

NASDAQ futures are down moderately this morning, nominally in response to anxiety over Iraq and oil, but really this is mostly about continuing to test NASDAQ since it is at the top of an extended trading range and still hasn't broken out above its March peak. Plenty of more bearish short-term speculators are itching to take a bite out of NASDAQ's hide, and they can do that to some extent, but how far they can go is an open question. Ultimately it depends on whether additional sidelined money comes into the market on the buy side. And we don't know how much sidelined money might be poised for bearish strikes on the sell (short) side.
Thursday might have been a preview of things to come, with very short-term speculators staking out some moderate short positions, but then closing them out for the weekend as we saw with Friday's modest recovery. Now we start a new week, so any bearish speculators will be tempted to stake out new short positions for the week.
Sure, we could see some 50 or even 100-point down days, or even 50 to 100-point up days on occasional short squeezes and plenty of volatility as the drama over testing NASDAQ plays out in the coming days. Volatility becomes the dominate trend (range trading) when people can't make up their minds with conviction over whether the market is consolidating or correcting downwards or building a base for a breakout.
Overall, the economy is still poking along, albeit not the boom some people want, but not the bust a lot of people fear. Iraq is of course a mess, but it always was. The recent setbacks seem manageable, albeit not as promptly and as cleanly as a lot of people would want. Meanwhile technical, chart-based traders, speculators, and investors remain anxious to see if NASDAQ has the resilience to hang in there and break out in short order, or whether it is doomed to trade back down in the trading range.
Saturday I was doing a little research and added Fusion-io (FIO) to my "Buy" list, but now it's too late – SanDisk (SNDK) is buying them and the stock is up 24% in pre-market trading. Sigh. I may buy a little SNDK if it dips on the acquisition.
-- Jack Krupansky

Friday, June 13, 2014

Some consolidation for NASDAQ

Finally we got a non-trivial amount of consolidation for NASDAQ yesterday, although even so it was less than a 1% drop, which is really only a modest speed bump as these things go. Maybe the anxiety in Iraq was a factor, or maybe not. Either way, NASDAQ has had a nice run over the past six weeks, so a little consolidation has certainly been in the cards. Trader sentiment is relatively neutral but still with a somewhat negative bias, with NASDAQ futures bouncing around in both directions – down when I started writing this message and now up as I finish editing it. No "conviction" as they say.
Today is a Friday (oops... Friday the 13th no less!), so short-term speculators may dump positions ahead of the weekend when anything can happen – or maybe they already did that yesterday using Iraq as the excuse.
The incremental improvements in the economy are still in place and NASDAQ is still short of its March peak, so the ongoing, albeit sloppy advance of NASDAQ remains intact and well supported.
I did pick up a small position of Lululemon Athletica (LULU) yesterday on its big dip. I'm not convinced that its slide is over, but trying to guess or time an exact bottom is too difficult for me and I do think this was a reasonable price. My theory is that I will add to my position incrementally on addition slides or 5 to 15%.
Today I'll be on the lookout for any new 10% plunges of what I would otherwise consider solid companies.
On the flip side, it will be interesting to see how the market responds to Intel (INTC) and its positive guidance, and whether Intel is about to drag NASDAQ a bit higher despite the consolidation sentiment.
-- Jack Krupansky

Thursday, June 12, 2014

NASDAQ still due for some residual testing

Traders and speculators failed yesterday in their attempt to incite a downdraft for NASDAQ, with the index closing down only a few points and well above the opening dip. They made a valiant push later in the day with a further 15-point decline, but NASDAQ bounced right back. Futures are bouncing around this morning, indicating uncertainty as to how much testing remains, but as of this moment they are down modestly, indicating that traders do expect the testing to continue with a modest dip at the open. Once again, the big question is whether speculators respond by piling on with any vigorous and enthusiastic selling, or buying the dip as we saw yesterday.
In short, we're still not out of the woods for this technical testing, and we're still not out of the woods for some deep-pocketed bearish short-term speculators to hang back and wait until the market gets a little more over-extended with buying exhaustion before they leap and go for a 50 or even another 100-point swoon, but even if they do or even if they don't, NASDAQ and the underlying economy are still positioned to keep incrementally advancing upwards, despite the occasional potholes along the way.
I'll probably pick up a little Lulu Athletica (LULU) at the open with a huge dip due to purported disappointment over their quarterly report and forecast. Sure the results were a little disappointing, but not THAT bad.
Correction from yesterday: I said IMF when I should have said World Bank – I do know the difference, but I always think of them as twins and they are difficult to tell apart sometimes from their public statements alone unless you stop and think for more than two seconds. The good news is that even though the World Bank lowered their global forecast for the year, it is still growth at a faster pace than last year.
-- Jack Krupansky

Wednesday, June 11, 2014

Another test for NASDAQ

NASDAQ futures are down fairly sharply, indicating that traders will take a rather negative bias at the open. There is no significant news other than a modest revision to an IMF economic forecast – that is still completely consistent with all previously known economic data, namely that the global economy will continue to plod along, albeit at a somewhat slower pace, so no boom but no bust.
Is the futures drop warranted? Not from a fundamentals perspective, but with the recent rally appearing to run out of steam and not scoring a breakout in recent days, traders and short-term speculators automatically switch over to betting on a reversal and consolidation if not a short-term trend change to trade back down in the trading range. None of this has to do with longer-term fundamentals, just short-term trading "technicals."
The open question is whether short-term speculators will pile on in the short direction after the opening dip, or if the more bullish speculators will sense that "too many people are leaning in the same direction" and pile on in the long  direction and kick off a recovery short squeeze. Sure, we COULD see a 50 or 100-point downdraft, or maybe just a lot more volatility and another narrow change by the close, or we could see a breakout if the initial attack itself runs out of steam.
Note that all it will take is a 20-point gain at the close to put NASDAQ above the March near-term peak. That won't be enough to secure a full-blown breakout, but is the first necessary step. What we're really looking for is a sustained move above that March peak, like at least a few days.
I'm okay with a bit of consolidation here, but even if that does happen, it won't impact the longer-term trend significantly.
Overall, I'm still biased in the positive direction.
-- Jack Krupansky

Tuesday, June 10, 2014

NASDAQ poised for breakout or a breather

NASDAQ limped upwards moderately on Monday, but not with a lot of conviction, with quite a few former momentum leaders showing losses for the day. Futures are down again today, suggesting that traders once again think NASDAQ is due for a breather and some consolidation and more likely to trade back down rather than break out of its trading range to a new high above the former near-term peak on March 5, 2014.
NASDAQ only needs a hair over half a percent to top that March 5, 2014 near-term peak. Sure, it's clearly within striking range, but the weak action for former momentum leaders raises a bright yellow flag.
The important thing is that it is not so much a matter of the chart price numbers as a question of how much sidelined money will be enticed into the market. If just a few hedge funds become just a little more bullish or just a modest fraction of retail investors jump back into the market, that March peak would be gone in a heartbeat, but all it takes is a little more bearish sentiment to bend the curve and send NASDAQ tumbling down in its trading range.
I continue to expect this week to be a volatile struggle for direction. NASDAQ lost virtually all of its early gains on Monday, but then bounced back and regained half of them. Not a sterling example of a market with conviction. But, a lot of this lack of conviction is likely due to simple anxiety over where the breakout above the March peak will occur – and stick.
I still refer to the past three months as a "mini-correction" for NASDAQ. It wasn't quite enough to qualify as a 10% market correction, but 8% is close enough and three months (so far) is certainly long enough to qualify for a correction in all but name. Still, I think mini-correction and trading range are more apt descriptions for NASDAQ over this recent period.
Another factor is that the Dow and S&P have rallied over that three month period, with a bit of sector rotation out of NASDAQ and its former momentum leaders, so maybe the hedge funds might choose to rotate again, back to NASDAQ and its former momentum leaders.
The bottom line is to expect some more volatility and anything goes in terms of sharp moves higher or lower.
-- Jack Krupansky

Monday, June 09, 2014

NASDAQ facing another moment of truth

NASDAQ posted another week of healthy gains and is now poised about 1.25% below it's near-term peak on March 5, 2014. Futures are down modestly, indicating that traders are biased towards NASDAQ taking a breather and consolidating a little, but futures aren't necessarily a great indicator of how sidelined money will play out as the day progresses and finally ends.
The infamous "sell in May and go away" traditional seasonal trading pattern is now effectively behind us, as a no-show. Ukraine is muddling along. The U.S. economy is plugging along. Q1 and the bad weather of the winter are now behind us. The end of Fed taper is still months away. Rising Fed rates are even further away. Q2 is near its end. In short, everything is positioned for an ongoing bull market, with one major uncertainty – how much sidelined money is poised to jump into the market vs. people anxious to "take some money off the table" to protect their profits.
NASDAQ is poised to either break  out of its trading range bounded by the March 5th peak, or to trade back down in that range.
Anything could happen at this stage. Up or down 5 (or less) to 20 points. Up or down 50 points. Even up or down 100 or more points. Arguments can be made for all of these very short-term outcomes. Nonetheless, I do believe that NASDAQ will continue its gradual recovery from the April 11, 2014 trough (higher lows), albeit with a lot of volatility and occasional trading ranges along the way.
One concern is that a fair amount of the NASDAQ recovery from that trough has been a rotation into more traditional technology stocks such as Apple and Microsoft, while quite a few of the former momentum leaders have languished. How that rotation will continue and evolves will be interesting to see. Rotation makes the market shift around, but doesn't really help that much in the long run – only additional in flows of sidelined cash can do that.
-- Jack Krupansky

Friday, June 06, 2014

NASDAQ poised below March peak... but headed into the weekend

NASDAQ posted a second good day in a row after three straight days of modest consolidation. It is now poised a mere 1.5% or so below the near-term peak of March 5, 2014. A decent employment report this morning may give NASDAQ another modest boost, with futures already up moderately, but since it is a Friday short-term speculators may dump positions ahead of the weekend when anything can happen.
Next week will be the very tail end of any potential "sell in May and go away" traditional seasonal trading pattern, but so far that seasonal trading pattern has not been evident, with NASDAQ up about 4% since the beginning of May.
There is still a non-zero risk that NASDAQ remains in a trading range with the early March peaks as the upper end of that range. Who's to say whether hedge funds will be "shedding risk" or going more heavily with "risk on" as NASDAQ starts bumping up into the early March "overhead." The real test today is whether any early rally is met with additional buying or with a "sell into any rally" sentiment. But even if there is sustained early strength, any rally might peter out later in the afternoon, or not.
To reiterate, the economy continues to incrementally improve, which should be the underlying driving force underpinning the stock market.
-- Jack Krupansky

Thursday, June 05, 2014

NASDAQ moving on to the next phase of testing the recent mini-advance

NASDAQ did an excellent job of hanging in there after three straight days of slack momentum. Traders forced a dip, but it went nowhere. Unfortunately, I don't think it was really bullish speculators buying the dip so much as an instance of selling exhaustion as bearish speculators ran out of gas and just a little buying from bullish market participants kicked off a minor short squeeze or "dead-cat bounce."
Now we move on to the next phase, to see if the recovery bounce was enough to draw more bullish money off the sidelines.
NASDAQ futures are up, indicating a bounce on the open, but the real question is if bullish speculators will pile on in a sustained manner or whether bearish speculators will both "sell into any rally" and also do so in a sustained manner. More likely, we may just see some flip-flopping back and forth, maybe ending the day on a positive note or maybe not.
Even if we do have a nicely positive day, we need to see more sustained conviction and a push above the March peak before we can safely breathe a sigh of relief.
The fundamental good news is that the economy continues to incrementally strengthen.
-- Jack Krupansky

Wednesday, June 04, 2014

NASDAQ to be tested again

For three days in a row now the bearish short-term speculators have been testing NASDAQ, trying to find some weakness to drive it more deeply down back into its trading range, but for three straight days all they could manage were some intraday downwards spikes down that were followed by dip-buying and only modest losses by the end of the day. NASDAQ futures indicate that traders believe that the bears will try again today, but futures are frequently not reliable indictors of trading during the day or where the market will end up at the end of the day.
The flip side of all this futile testing is that NASDAQ is building up a semi-decent base for a new leg up. I would note that after the March peak, NASDAQ immediately took a nose dive, indicating a near-term peak, while we are not seeing that here.
Whether the bulls or bears finally win at this level remains to be seen, but the good news is that NASDAQ really is hanging in there despite the bear tests and despite the fact that deeper consolidation would not be that unreasonable.
Traditional traders would love to see NASDAQ trade down to "fill the gap" from the pop last Monday, but even though that may be a traditional trading pattern, that doesn't mean the market will necessarily follow tradition. They may still see it, but it is encouraging that NASDAQ is being so resistant to deeper consolidation.
I picked up some more Staples (SPLS) yesterday. It may indeed move lower (and I'll buy more), but this just smells like more of a short-term bearish speculator attack rather than actual selling by long-term investors. It's now paying a 4.4% dividend that is a fraction of actual earnings.
-- Jack Krupansky

Tuesday, June 03, 2014

At last, a test for NASDAQ

There's no particular bad news this morning, but NASDAQ futures are down moderately strongly, suggesting that traders are ready to test the NASDAQ advance of the past two weeks. Whether bearish speculators pounce on a weak open and strive to push NAASDAQ down by 30 to 50 or even 100 points remains to be seen, but those possible outcomes are on the table.
After a decent 2-week rise, NASDAQ was due for some consolidation anyway. Weakness on Friday and Monday suggested that upwards momentum had fallen off, so at least a moderate pullback in now in the cards, anyway.
Whether any pullback is merely a speed bump, or a reversal back towards the lower end of the recent trading range, or a true new leg down for the spring mini-correction, possibly to turn it into a full-blown correction, remains to be seen.
The immediate question is whether bullish short-term speculators pounce on any early market decline with any significant "buy on the dip" enthusiasm. If they don't, even bullish short-term speculators may pull in their horns and "ride with the tide" by joining the bearish crowd, at least as long as the momentum is strongly negative.
A second question is whether the intensive selling and shorting of the formerly hot momentum stocks on the past two trading days may or may not have run its course. In other words, whether we might be due for a short-covering squeeze bounce on those stocks.
The real question is whether the bias of sidelined money flows is building up towards a medium-term, "risk on" positive bias or not. Will more hedge funds become bullish as bearish momentum fades? Will more mutual fund managers become more bullish? And, most importantly, will retail investors dump more money into retail mutual funds?
-- Jack Krupansky

Monday, June 02, 2014

NASDAQ poised for... something

After two positive weeks, NASDAQ is looking a little healthier. But... is it poised for a continued breakout, possibly to a new high for the year, or poised for a reversal to swing back down in a trading range? Or maybe poised for some volatility with little net change by the end of the week? It all depends on whether your average hedge fund decides to bias their trades with "risk on" or "risk off", and if there is disagreement, then we get choppy volatility. Of course, for the long run, the question is mutual fund money flows – are retail investors enticed into the market, or do they hold back or even withdraw from the market out of fear? Lots of variables in the market equation this week.
The good news is that the overall U.S. economy is still poking along at a quasi-decent pace, much improved since the cold winter, and poised for more incremental improvement though the rest of the year and beyond.
There was a lot of selling of popular technology momentum stocks on Friday, but that may simply have been due to a lack of upwards momentum that day rather than true "time to bail" sentiment. We'll have to see if there is any follow-through on that lack of momentum in the coming days.
NASDAQ futures have a slight positive bias, but even with a positive open, the question is whether there are a bunch of hedge funds out there with a renewed "sell into any rally" bias.
I continue to have a positive bias, but that's me and shouldn't be confused with the overall market! I also am poised to take advantage of any big dips for solid stocks.
-- Jack Krupansky