Some consolidation for NASDAQ

Finally we got a non-trivial amount of consolidation for NASDAQ yesterday, although even so it was less than a 1% drop, which is really only a modest speed bump as these things go. Maybe the anxiety in Iraq was a factor, or maybe not. Either way, NASDAQ has had a nice run over the past six weeks, so a little consolidation has certainly been in the cards. Trader sentiment is relatively neutral but still with a somewhat negative bias, with NASDAQ futures bouncing around in both directions – down when I started writing this message and now up as I finish editing it. No "conviction" as they say.

 

Today is a Friday (oops... Friday the 13th no less!), so short-term speculators may dump positions ahead of the weekend when anything can happen – or maybe they already did that yesterday using Iraq as the excuse.

 

The incremental improvements in the economy are still in place and NASDAQ is still short of its March peak, so the ongoing, albeit sloppy advance of NASDAQ remains intact and well supported.

 

I did pick up a small position of Lululemon Athletica (LULU) yesterday on its big dip. I'm not convinced that its slide is over, but trying to guess or time an exact bottom is too difficult for me and I do think this was a reasonable price. My theory is that I will add to my position incrementally on addition slides or 5 to 15%.

 

Today I'll be on the lookout for any new 10% plunges of what I would otherwise consider solid companies.

 

On the flip side, it will be interesting to see how the market responds to Intel (INTC) and its positive guidance, and whether Intel is about to drag NASDAQ a bit higher despite the consolidation sentiment.

 

-- Jack Krupansky