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


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