Friday, August 22, 2014

NASDAQ searching for direction, again

Well, NASDAQ survived a third test of the durability of the breakout from its trading range and passed without too much effort. That doesn't mean that we are out of the woods, but it is a positive sign. The bad news is that upwards momentum has evaporated, so now NASDAQ is a sitting duck target for the bears. The flip side is that the bulls are just waiting for the bears to just try and make a move, and then they can come in and clobber them again. But, that works both ways, so it's sort of a stalemate. So, NASDAQ has to wait them out until somebody moves with more conviction.
 
It's yet another Friday, so short-term speculators will tend to exit their positions ahead of a summer weekend when anything can happen. Whether that exit, by both bulls and bears, is a net positive or negative is of course unknown.
 
NASDAQ futures are down slightly, suggesting a little consolidation at the open. Whether that lack of upwards momentum inspires a round of selling or whether it inspires a round of dip buying remains to be seen.
 
Some consolidation is still in the cards, but not a pure slam dunk. Volatility and drifting are the default for the slow trading of the summer doldrums. But if the bears get too aggressive, the bulls will be only too willing to hit them hard and kick off yet another short squeeze rally, which will only attract even more retail investors and money managers into the market who are increasingly worried that they are missing a train that has already left the station.
 
-- Jack Krupansky

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