NASDAQ remains in its trading range

NASDAQ strongly bounced off the lower edge of its trading range on Monday. That doesn't mean the coast is clear, but is nominally a good sign and indicates that recent selling pressure was likely merely range trading rather than a true trend downwards.

 

NASDAQ futures are up strongly, indicating a strong pop at the open, which will probably kick off another short squeeze and send NASDAQ towards the upper end of its trading range, at least temporarily. Whether the gains stick is an entirely separate matter.

 

Kicking myself for not buying EBAY months ago when I concluded that they would eventually spin off PayPal. Maybe I'll buy a little EBAY now anyway. I do feel that PayPal is an enduring brand (like Priceline (PCLN)) and destined for continued greatness.

 

-- Jack Krupansky

NASDAQ still struggling to seek direction

It kind of looks like traders will try to take advantage of a little unrest in Hong Kong to try to shake the markets out of their narrow range trading. Besides, a little more democracy in Hong Kong and China would be a GOOD thing!

 

Neither Thursday nor Friday was a solid indicator of the underlying market trend. We do remain stuck in a trading range. We're actually still more towards the upper edge of the range, so it's no surprise that traders would try to "test" further down in the range.

 

NASDAQ futures are down moderately sharply, indicating a significant dip at the open, but... the question is whether people pile on with more selling sentiment, or... whether they buy on that dip. We could see only early selling pressure, and then a gradual if only partial recovery for the rest of the day. Or... we could see a more dramatic test towards the lower edge of the trading range.

 

Our job as investors is to see though all the daily fluctuations of the market, and even to see beyond the short-term trends and short-term influences. The Fed October meeting will be behind us in a matter of weeks. There is always plenty of noise out there; once again it is the job of investors to see beyond the noise, not get distracted by it.

 

-- Jack Krupansky

NASDAQ simply lurching within a trading range

Yeah, those bears really retaliated with vigor on Thursday after they got burned in the short squeeze on Wednesday. Nothing really new here while we're wandering in a trading range. Sure traders can react strongly to the smallest tidbits of news, or maybe I should say overreact. The U.S. economy is still on track to continue its recovery in the months ahead – ignoring fluctuations in volatile reports such as durable orders and unemployment insurance claims – and the Fed is still on track to act reasonably in a manner that remains supportive of improvement in the economy, so... what's to worry about? Sure, anxiety is a worry, but anxiety is the norm in an ever-changing world. In fact, the only time we should really worry is when nobody has any anxiety (true complacency), but we're clearly not there.

 

NASDAQ futures are up, suggesting a recovery bounce at the open, but whether that is a dead-cat bounce that people sell into to continue the sell-off or whether they pile on for a renewed short squeeze remains to be seen.

 

I bought a little NASDAQ-100 Powershares (QQQ) to play the dip. I also picked up a little Expedia (EXPE).

 

Some people have suggested that the resistance for QQQ at the $100 level is driving the market. Could be. Certainly contributes to NASDAQ volatility to at least some degree.

 

In any case, we will likely see plenty more volatility and trading range behavior until we get past the anxiety of the Fed finishing up QE in October.

 

-- Jack Krupansky

NASDAQ needs to digest the short squeeze

The rally on Wednesday was nice, but it was mostly simply a short squeeze caused by too many bearish speculators wanting to protect their profits as the sell-off ran out of steam, so it is not so certain to stick. It may in fact stick, especially if bears jump on with too much wild abandon, but doing so could leave them vulnerable to an even bigger short squeeze. Mostly we're just going to resume the bouncy up and down of a classic trading range.

 

-- Jack Krupansky

NASDAQ poised for another test of trading range

(Oops, a phantom send!)

 

NASDAQ went through another test yesterday and escaped without too much damage. There was no additional flood of selling, and there was a moderate amount of attempted dip buying during the day, suggesting that the sell-off may have run its short-term course. Now, traders are ready to test in the opposite direction, by trying to kick off a short squeeze to force opportunistic bears to buy in order to close out short positions to protect their meager gains from the past couple of days. That short covering could kick off a nice rally – or peter out and quickly reverse and incite much more intensive selling. Either way, for now NASDAQ remains in a trading range, neither bullish nor bearish per se.

 

NASDAQ futures are up moderately, on no particular change in the economic or business situation, suggested that traders are trying to force a pop at the open to test if bears are losing some of their appetite for risk and exactly how much dip-buying sentiment might be out there.

 

This kind of range trading will likely persist until the Fed officially ends its QE asset purchase program in October.

 

-- Jack Krupansky

NASDAQ poised for another test of trading range

NASDAQ went through another test yesterday and escaped without too much damage. There was now additional flood of selling, and there was a moderate amount of attempted dip buying during the day, suggesting that the sell-off may have run its short-term course. Now, traders are ready to test in the opposite direction, by trying to kick off a short squeeze to force opportunistic bears to buy in order to close out short positions to protect their meager gains from the past couple of days. That short covering could kick off a nice rally – or peter out and quickly reverse and incite much more intensive selling. Either way, for now NASDAQ remains in a trading range, neither bullish nor bearish per se.

 

NASDAQ futures are up moderately, on no particular change in the economic or business situation, suggested that traders are trying to force a pop at the open to test if bears are losing some of their appetit

-- Jack Krupansky

Another test to see if NASDAQ is now stuck in a trading range

That was a solid test for NASDAQ on Monday, but one day does not establish a trend. The question right now is whether NASDAQ hit the top edge of a trading range and whether it will now trade down towards the bottom edge of that range. So, today will be a second test to see if there is any substantial interest in continuing the sell-off from Monday (and Friday), or whether this was simply a little "breather" rather than a full-blown trading range or outright correction.

 

NASDAQ futures are indicating another sag at the open. The question remains whether people will continue to pile on to any selling, or whether we hit "selling exhaustion" and people start "buying the dip."

 

-- Jack Krupansky

NASDAQ poised for a test

Okay, NASDAQ has now had two full weeks (minus Labor Day itself) for the "heavy hitters" to get back from summer break and "get back into the saddle" and revise NASDAQ after its summer movement, not to mention a couple of days to digest the most recent Fed pre-positioning in advance of finishing their QE purchases next month. That should be enough time, so now it's time for those heavy hitters to start to make their opening fall moves. In fact, tomorrow is the first day of fall. But... today will be one last opportunity for bears to make their move. Also, even though people had a couple of days to respond to the Fed statements, a weekend can give people a lot more room to deepen or revise their convictions.

 

NASDAQ is down all of 0.48 points since the end of August, about as flat as can be, suggesting that there is no solid sentiment as to market direction. That's bad from a purely bullish perspective, but equally bad from a purely bearish perspective. Ultimately it's all a matter of money flows rather than the perspective of people noisily promoting their perceptions of the coming trend. It's investors sitting on the sidelines with cash they are ready to invest, or already invested and anxious to protect profits who hold the key.

 

In short, futures traders are merely guessing or speculating how people will react today. They are entitled to guess, but that doesn't make them automatically correct in that guess.

 

My feeling is that the most anxious investors have already taken their money off the table, probably earlier in the summer (July was a down month for NASDAQ), and most certainly during the flat to weak market of the past two weeks.

 

NASDAQ futures are down moderately sharply, indicating a sag at the open, but... the real question is how people react – will they pile on for a deeper sell-off, or... will they buy the dip? That's the test, for today.

 

We could see a fair amount of negative trader sentiment over the next several weeks as traders "worry" about how the market will respond to the Fed QE purchasing end next month, but... as they say, "a bull market climbs a wall of worry."

 

-- Jack Krupansky

Waiting for Alibaba to open

It's now past 11:00 AM and still Alibaba (BABA) stock has not started trading on the NYSE after its IPO. I have my small limit order at $92 and "indications" are $88-90, with an open within maybe half an hour.

 

My initial limit order was at $78.50, then I raised it to $85, both before any indications had been given publicly. Once I saw an indication at $86-88 I raised my limit to $89. When I saw the indication at $87-89 I raised my limit to $92.

 

Some people say they will open at $88 since that is a lucky number. And some say more of the sell orders are at $90 or higher, so I feel my $92 limit is safe, for now.

 

I'll move my limit to be $2 over whatever latest indication I see on CNBC.

 

-- Jack Krupansky

Alibaba IPO strategy

I don't have the connections to get in on the actual IPO of Alibaba (BABA), so I'll be playing it strictly on the secondary market. They'll "price" the IPO this evening sometime, like in the $66 to $68 range. About an hour or two before the market open on Friday brokerages will start taking "indications" or limit orders. No market orders are permitted before BABA itself opens, which could take a half hour or more after the normal market open when the market makers see those indicated orders settle into an orderly market or a fairly narrow range.

 

My guess is that BABA could open at a 20% premium to the IPO. So if it prices at $70 due to very strong interest, it could open at $85. That's a fair (but not great) price to me. Sure, it could come in at $100 or more, or maybe only $80 or $75 with equal probability.

 

As soon as I see the initial indications, I'll place a limit order of only modest size a fair amount below the indicated price at that moment. I'll watch it carefully and move my limit order up or down as the indication changes. As we get closer to the normal market open at 9:30 AM I'll narrow my limit order to just a little below the indication.

 

If the indication is substantially higher than the IPO price, shortly before the normal market open I may split my limit order in half, with half at or above the indication to assure that I will get a small position at the open, and half a moderate amount below the indication to catch any moderate dip during the day. Later in the day on Friday I may make a second purchase if the stock dips significantly from the opening price.

 

My main strategy is to not go "all in" on the secondary market at the IPO, but to expect to buy more on later dips, as I did with Twitter and Facebook. So, my total position size at the end of the day on Friday may only be half of my ultimate position size.

 

It will be interesting to see how Twitter (TWTR), Facebook (FB), and Amazon (AMZN) react as the BABA IPO plays out.

 

Note that BABA will be listed on the New York Stock Exchange, as Twitter is, so it will have no direct impact on the NASDAQ index, except to the degree that Amazon, Facebook, et all move in reaction to the IPO.

 

I'm definitely not betting on any single horse here. We have a lot of very strong companies out there now – and a lot more waiting in the wings. The dot-com era is about to be eclipsed, big time.

 

-- Jack Krupansky

NASDAQ poised to bounce back from a minor bear attack

That was fun. NASDAQ did indeed have a nice pop at the open on Wednesday, as futures indicated, but as I had indicated, futures tell you how the market will open, not how people will react after the open. I said that it was an open question of whether people would pile on to the rally or sell into it – they clearly ended up doing the latter. It was an example of "buying exhaustion" – everybody who was prepared to buy had already done so, so there was no further immediate upside available, so traders reversed their bias and down we go. The selling pressure really only lasted for the morning, with NASDAQ bouncing a little and closing a few points above that noon level. So, the good news is that selling pressure was only modest to moderate and not sustained, but the bad news is that the bulls held back from buying the dip with anything resembling enthusiasm. Maybe the bulls just wanted to see what else the bears might be prepared to offer, and the same sentiment on the part of the bears – a classic waiting game.

 

It's still too soon for all the heavy hitters limping back from summer break to be firmly in their saddles, so we still don't know their net risk bias, whether we're going to be facing "risk on" or "risk off" in the coming weeks. Give them another week or so, for the dust to settle, sort of.

 

NASDAQ futures are up moderately, indicating another pop at the open, for a recovery bounce, but... this could be another fake-out, a "dead-cat bounce", or traders simply trying to tee up the market for a fresh bear attack. IOW, it remains to be seen, again, whether people will pile on to any initial rally or sell into it. I expect plenty of volatility as people engage in a tug of war to determine the market direction.

 

I'm going to be traveling, out of town, and mostly otherwise occupied for eleven days starting on Friday, so I may miss a lot of the action. I have a good combination of exposure to the market and decent cash reserves, so I'll be well-positioned no matter how the next twelve days play out, but I may miss out of buying any short-term dip opportunities. My next big trading day will be Tuesday, September 16, 2014. It will be interesting to see how the market plays out during that interval.

 

-- Jack Krupansky

NASDAQ poised to extend its rally

NASDAQ managed to extend its rally in the first trading session after the Labor Day break, which is rather impressive. Futures indicate another pop at the open, but once again we need to wait and see whether more people pile on or sell into the rally. For now, the bears are being kept at bay. But as I have said, it may take a few days or even a week or two for the heavy hitters to get firmly back in the saddle and chart a more definitive market course for the coming months.

 

-- Jack Krupansky

NASDAQ poised to drift a little higher

NASDAQ closed out the summer with a decent gain for the month of August, but now that we are past the Labor Day break it will be a whole new ball game. It may take a few days or even a week or two for the "big hitters" to get back in the saddle and clearly set their sights, so we may drift a little on cruise control before the market sets a more deliberate longer term trend.

 

Futures are up, indicating a little pop at the open, but the question is whether people will pile on to that rally or sell into it, and whether they reliably buy on any dips that occur during the day.

 

People are still struggling to settle on a comfortable "narrative" for how things will play out when the Fed officially ends its QE buying program in October, but I'm feeling that overall it will be kind of a wash by the time we get further into November. The pace of the real U.S. economy will be far more important, and currently that continues to be an incremental upwards trend, with no clear end in sight, albeit with plenty of potholes along the way.

 

Geopolitical concerns? Just noise that traders will use as cover for any consolidation they may want to periodically perform.

 

-- Jack Krupansky