Monday, August 11, 2014

NASDAQ poised to resume bouncing up within trading range

Although NASDAQ did technically break a bit below the lower edge of the trading range defined by the March peak, it did not do so with enough conviction to attract enough bearish sentiment to constitute a true breakdown and another leg down. Instead, we had a semi-decent recovery bounce on Friday that left NASDAQ 12 points above that March peak. So, NASDAQ continues to hover near that lower edge of the trading range. Traders don't like to hover, so if NASDAQ won't break down, then they will try to push it up.
 
NASDAQ futures are up fairly strongly this morning, suggested a big pop at the open. That could kick off a reasonably significant short squeeze. But then once again we will be faced with the question of whether people pile on to any initial pop with real enthusiasm, or whether the bearish short-term speculators sell into any rally. And futures don't tell us how trading will evolve during the day.
 
Despite all of this, we are still locked in the summer doldrums of slow trading, so volatility is the only sure thing, and otherwise all bets are off. So the market could move one way and then the other, rinse and repeat. Meanwhile, individual stocks could show some significant action. I'll be on the lookout to buy big dips and take a little money off the table on decent advances.
 
I'm not so sure how to play Priceline (PCLN) these days. It had a big run-up but is now trading in a fairly narrow range, without any significant breakout potential in the short-term. The quarterly report came out this morning and sentiment seems a little negative. I already have a significant long-term buy and hold position, but I'll be tempted to buy into any significant dip.
 
-- Jack Krupansky

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