NASDAQ set for another test of the durability of the breakout
NASDAQ managed to survive Wednesday with only minimal damage to the breakout. It was a very slight decline, although a lot of momentum stocks (like in my portfolio!) did see some significant erosion, which is typical if the market is not advancing reasonably strongly. The big question is whether Wednesday was just a little consolidation, a one-day thing, or a sign that buying enthusiasm has peaked and is evaporating at a rapid pace. But, either way, we could see further consolidation, even if the advance does resume after a little breather.
NASDAQ futures are up modestly, suggesting that traders think yesterday was in fact just a needed breather, and that they are willing to give the market another shot. But... another shot does not necessarily mean that people have a lot of conviction that a sustained advance is a slam dunk at this stage. That said, this kind of half-hearted, soul-searching posturing is actually quite typical for any decent advance.
The big question remains whether people pile on to any rally at the open, or resume selling into any rallies, and how much buying pressure, if any, comes out of the woodwork on any dips.
As previously noted, we're still stuck in the summer doldrums of slow trading through Labor Day, so any moves that occur in the next couple of weeks will be subject to significant "revision" once the "heavy hitters" get back from their summer break.
-- Jack Krupansky