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