NASDAQ set to pause as it seeks direction

This recent NASDAQ rallying is quite impressive, if not for the fact that it is occurring in the context of the slow trading of the summer doldrums. We saw a nice pop at the open yesterday, but there was a moderate amount of selling into that rally, so not all of it stuck at the close. Still, it is heartening that there wasn't more selling.

 

NASDAQ futures are up moderately, suggesting a modest pop at the open, but once again the big question is whether people pile on and pump up that rally, or sell into the pop and bet on some consolidation. At this stage, a lot of the rally over the past week has probably spent itself, so consolidation is more likely than any big surge upwards. Besides, the bears who got clobbered by recent short squeezes are just itching for some payback.

 

Once again, all of this nominal market movement during the slow trading of the summer doldrums will be subject to heavy review and revision once the heavy hitters get back to their desks from their relaxing summer breaks... in just one week from today. Get ready!

 

That said, the underlying U.S. economy continues to incrementally gather steam, putting more people back to work and continuing business investment, all of which constitutes a "rising tide" underpinning the stock market. And don't worry about the Fed "taking away the punch bowl" – interest rates will remain quite low for an extended period of time.

 

-- Jack Krupansky