Wednesday, November 19, 2014

NASDAQ continues to grind higher as hedge funds keep the faith

Hedge funds and other speculators have so far refused to give up faith in NASDAQ, allowing the index to "grind higher", setting both a new high for the year and finally closing above the psychological 4700 level for the first time since the dot-com days of 2000. The great unanswered question is how long hedge funds will maintain a net "risk on" bias. I mean, at some point they will start taking money off the table, but whether that day is today, tomorrow, next week, next month, or next year is anybody's guess.
 
NASDAQ futures are down modestly, suggesting a modest dip at the open as traders are also uncertain about the durability of the upwards trend and feel that a little consolidation would not be unreasonable. The big question is not how the market will open, but how the hedge funds and other speculators will respond to any dip, either piling on for a selloff or buying the dip.
 
Personally, I'm starting to consider positions I can start trimming a little to raise higher cash reserves for the inevitable future rainy days, but otherwise I'll remain relatively fully invested.
 
-- Jack Krupansky

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