Wednesday, July 23, 2014

NASDAQ poised to either break out or stay within its trading range

NASDAQ had a nice little pop on Tuesday and futures are indicating another moderate pop at the open. Quarterly reports are fairly decent overall.
NASDAQ is less than 1% below its recent near-term peak, so traders and speculators are itching to find out if NASDAQ can break out to a new short-term peak or stay within its trading range. Flip a coin. I mean, I'm reasonably confident that eventually NASDAQ will break out, but whether it occurs today or tomorrow or next week is subject to market whimsy even though economic and business fundamentals are the primary driver over the long run.
Microsoft (MSFT) had mixed results, with better revenues but weaker earnings, so it will be interesting to see how people respond after the open. The stock is poised to pop at the open, but whether people pile on to ride it higher or sell into the rally remains to be seen.
Apple (AAPL) will be an interesting case as well. The stock is fairly fully valued, so it is unclear whether people are anxious to ride it higher or not. I'm kind of neutral, but have a reasonable size position, so I'm not anxious to buy more, unless there is a big dip.
In short, today people get to put in their two cents (or two thousand dollars) as to whether they are happy with technology stocks or not. We're only part way into Q2 reporting season, but far enough for people to have a rough sense of where we're headed. So, people will be deciding whether to take some money off the table or ride the rally some more. Alas, it has been quite a mixed bag.
Xilinx (XLNX) is getting crushed this morning. They are a great company, despite the obvious disappointment. They are on my list of interesting companies, so I will probably pick up a small position here.
Yesterday I told a fraction of my Chipotle (CMG) on its big pop and bought some more Netflix (NFLX) on its big dip. I like both companies.
I also sold part of my Microsoft (MSFT) holdings yesterday (way overweighted) and bought some short-dated call options to capture any significant pop after the Q2 report. We'll see how that goes today. I have both more cash and exposure to the upside, so it's a low-cost win-win.
-- Jack Krupansky


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