NASDAQ set to extend its breather... or not

NASDAQ did indeed take a little breather yesterday after all its recent rallying. No big surprise there. Based on a dip in NASDAQ futures this morning, it looks like NASDAQ is poised to extend that breather and maybe even do some more serious "consolidation"... or not. It all depends on the net posture of speculators and whether they are more inclined to pile on to some dip at the open or... buy any dip.

 

The chatter about Ukraine is just noise used by traders as "cover" for their underlying sentiment which is simply that NASDAQ is due for a breather anyway. A breather simply means that buying (or selling) volume has petered out and traders are waiting for the market to reestablish some direction. Traders don't make as much money with a stagnant market, so if buying dries up, their inclination is to reverse their bias and sell.

 

The economic news was good this morning, with Q2 GDP reported higher and jobless claims falling further. But, good economic news isn't a one-way positive for the market. On the plus side it underpins stronger financial performance for companies in the months and quarters ahead, which is good for stocks. But on the minus side it increases the possibility of the Fed raising interest rates sooner and faster, which could put a bit of a damper on stock trading. To me, it's all a net positive, but perma-bears always see the glass as half empty. Any Fed action on rates is still quite a few months in the future.

 

-- Jack Krupansky