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