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