Tuesday, June 24, 2014

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

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