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

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