Monday, August 25, 2014

NASDAQ set to try for a new leg higher

NASDAQ managed to preserve its breakout from its trading range last week, and now is poised to try for a new leg higher. It's doable, but whether it is sustainable is an open question.
 
NASDAQ futures are up strongly, suggesting a nice pop at the open, but the big question is whether people sell into that rally or pile on and kick off yet another significant short squeeze.
 
The real open question is how many bullish speculators still have uninvested cash and whether they are prepared to go to a more aggressive "risk on" posture from their current posture. If not, this new leg will peter out and reverse in relatively short order. But if they do take a more aggressive "risk on" posture, watch out as NASDAQ soars again.
 
Once again, I have to caution that all of this is happening in the context of the slow trading of the summer doldrums, so even if we do continue to set fresh near-term highs for NASDAQ, all bets are off with respect to how the "heavy hitters" respond after Labor Day when they get back to their desks from their summer break. And the impact, if any, of the Fed finishing their QE purchases in October is also a looming uncertainty. But, as they say, "a bull market climbs a wall of worry."
 
-- Jack Krupansky

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