NASDAQ poise to test and try for a breakout from trading range
The modest gain for NASDAQ on Thursday was quite welcome, and now positions the index barely 0.75% below the upper edge of its trading range, as defined by the near-term peak in early July. NASDAQ futures are up moderately, suggesting that traders think there is a chance that bullish speculators may make a run for a breakout above that July peak. That would also be predicated on a healthy pop caused by a short squeeze.
Even if NASDAQ does technically break out above the trading range, the big question is whether it is sustainable, or whether it simply gives bearish speculators a more attractive entry point for another run back down in the trading range.
And once again the main thing to look for is whether people pile on to any pop at the open or instead sell into any rally.
It's another Friday before a weekend during the summer doldrums, so short-term speculators can be expected to take at least some of their money off the table in advance of the weekend when anything can happen. Whether the net difference between the bullish and bearish speculators is positive or negative remains to be seen. I would simply note that the bears may opt to let the bulls have their one day in the sunshine, and then regather in force and pounce harshly again early next week.
Meanwhile, the real economy here in the U.S. continues to incrementally improve, which will continue to auger well for the stock market. We still have a long way to go before we are finally back to a fully productive economic state. Maybe another two years or so. Sure, the cynics will fuss about the Fed with wild speculation, but the Fed is focused on making sure that the recovery of the economy completes. IOW, the moderates are in control of the Fed right now, not the cynical hawks.
-- Jack Krupansky