NASDAQ to be tested again
For three days in a row now the bearish short-term speculators have been testing NASDAQ, trying to find some weakness to drive it more deeply down back into its trading range, but for three straight days all they could manage were some intraday downwards spikes down that were followed by dip-buying and only modest losses by the end of the day. NASDAQ futures indicate that traders believe that the bears will try again today, but futures are frequently not reliable indictors of trading during the day or where the market will end up at the end of the day.
The flip side of all this futile testing is that NASDAQ is building up a semi-decent base for a new leg up. I would note that after the March peak, NASDAQ immediately took a nose dive, indicating a near-term peak, while we are not seeing that here.
Whether the bulls or bears finally win at this level remains to be seen, but the good news is that NASDAQ really is hanging in there despite the bear tests and despite the fact that deeper consolidation would not be that unreasonable.
Traditional traders would love to see NASDAQ trade down to "fill the gap" from the pop last Monday, but even though that may be a traditional trading pattern, that doesn't mean the market will necessarily follow tradition. They may still see it, but it is encouraging that NASDAQ is being so resistant to deeper consolidation.
I picked up some more Staples (SPLS) yesterday. It may indeed move lower (and I'll buy more), but this just smells like more of a short-term bearish speculator attack rather than actual selling by long-term investors. It's now paying a 4.4% dividend that is a fraction of actual earnings.
-- Jack Krupansky