Monday, June 16, 2014

Traders continueto test NASDAQ

NASDAQ futures are down moderately this morning, nominally in response to anxiety over Iraq and oil, but really this is mostly about continuing to test NASDAQ since it is at the top of an extended trading range and still hasn't broken out above its March peak. Plenty of more bearish short-term speculators are itching to take a bite out of NASDAQ's hide, and they can do that to some extent, but how far they can go is an open question. Ultimately it depends on whether additional sidelined money comes into the market on the buy side. And we don't know how much sidelined money might be poised for bearish strikes on the sell (short) side.
Thursday might have been a preview of things to come, with very short-term speculators staking out some moderate short positions, but then closing them out for the weekend as we saw with Friday's modest recovery. Now we start a new week, so any bearish speculators will be tempted to stake out new short positions for the week.
Sure, we could see some 50 or even 100-point down days, or even 50 to 100-point up days on occasional short squeezes and plenty of volatility as the drama over testing NASDAQ plays out in the coming days. Volatility becomes the dominate trend (range trading) when people can't make up their minds with conviction over whether the market is consolidating or correcting downwards or building a base for a breakout.
Overall, the economy is still poking along, albeit not the boom some people want, but not the bust a lot of people fear. Iraq is of course a mess, but it always was. The recent setbacks seem manageable, albeit not as promptly and as cleanly as a lot of people would want. Meanwhile technical, chart-based traders, speculators, and investors remain anxious to see if NASDAQ has the resilience to hang in there and break out in short order, or whether it is doomed to trade back down in the trading range.
Saturday I was doing a little research and added Fusion-io (FIO) to my "Buy" list, but now it's too late – SanDisk (SNDK) is buying them and the stock is up 24% in pre-market trading. Sigh. I may buy a little SNDK if it dips on the acquisition.
-- Jack Krupansky


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