NASDAQ set to test whether the new near-term peak holds
Okay, NASDAQ actually did manage to break out relatively cleanly from its trading range and set a new near-term high, 22 points above the old near-term peak on July 3, 2014. That doesn't mean the coast is clear for the next leg up. In fact, the next task for traders and short-term speculators is to "test" the durability of this new near-term high.
NASDAQ futures are up modestly, suggesting that traders are willing to bet on further gains, but the big question is whether people continue to pile on to the rally at the open, or whether they sell into any rallies and bet or at least presume that the next move is more corrective.
I'm sure the bears are chomping at the bit to sink their teeth into this market, but they just got burned badly, so they may decide to wait a bit longer before diving back in to get a better (higher) entry price for fresh short positions. On the flip side, more bullish speculators may be more than happy to extend themselves to take advantage of a short-term lull in the bearish "risk off" bias.
And the usual caveat – all of this is happening in the summer doldrums of slow trading, so expect volatility and wait until after Labor Day for the "full team" to weigh in and cast their votes as to what is the more sustainable trend.
-- Jack Krupansky