Monday, July 21, 2014

NASDAQ in another trading range

The NASDAQ pop on Friday was great, but it merely balanced out the big decline of Thursday. It was nice to see at least a very modest trend upwards for the full week, but overall NASDAQ is once again locked in a trading range, this time bounded by the most recent near-term peak on July 3rd. Still, NASDAQ remains above the previous near-term peak of March 5th.
 
Trading ranges aren't a lot of fun due to the volatility and lack of a clear trend, but they do present short-term trading opportunities, as well as opportunities to buy on dips.
 
NASDAQ also remains above the weekly close of two weeks ago. The week before last was a down week, and then last week was an up week, which also suggests a trading range.
 
Quarterly reporting season continues, so we will seek plenty of volatility, sometimes due to actual surprises, but more frequently due to either traditional "buy the rumor, sell the news" selling or "sell the rumor, buy the news" buying.
 
Ukraine and Gaza? Personally I don't think either is a truly significant factor here, although traders are notorious for "spinning" negative (and positive) headlines into "narratives" far grander than the actual news itself.
 
I suspect that this week will also show a modest trend higher, but with a lot of volatility between now and 4 PM on Friday.
 
I was late posting today because I had to clean up a mess at the open because I neglected to sell out an in-the-money call option that was expiring on Friday. It "auto-executed" on Saturday, leaving me with a big pile of stock in my retirement account which had no cash to cover that amount of stock, so I had to sell the stock at the open, but the market opened weakly so I had to work a little to get a decent price. This was Autodesk (ADSK), which had a 3.5% jump for the stock on Friday, giving me a one-day gain of 262%. I lost almost half of that gain at the open, but that's life. Fidelity says that I may also get slapped with a trading restriction because of this (auto-execute without enough cash), but it shouldn't affect me too much since I don't normally do that much trading in that account anyway, and I wanted to increase cash reserves in that account as well.
 
-- Jack Krupansky

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