Monday, November 24, 2014

NASDAQ to plod through slow holiday week

NASDAQ trading this week will be slower and more volatile since fewer market participants will be at their desks due to the holidays, both the actual holidays and because people take off more days for either a long weekend or to take off the entire week. Whatever happens this week will be subject to revision or even a complete reversal next week as the holiday revelers get back to their desks next week.
 
There will be some amount of pre-positioning by speculators trying to get the jump on holiday retail sales since Friday is the infamous Black Friday that kicks off the Christmas shopping season. Solid data won't be available until the weekend, so the big reaction won't occur until Monday and Tuesday as the official numbers become more solid, but traders and speculators will react instantly to rumors and anecdotal news reports on Friday morning. Note that the stock market will be open Friday morning, but close at 1 PM.
 
NASDAQ futures are up moderately, indicating a moderate pop at the open, but as always it remains to be seen whether people pile on to that opening gain or simply sell into the rally, and then we will see how trading evolves during the day. On both Thursday and Friday we saw vividly how trading instantly moved in the opposite direction of the opening move. Of course, just because it can happen and did happen two days in a row doesn't mean that it is likely to happen again today.
 
NASDAQ is now in a limbo state, with no great incentive to march strongly higher nor sharply lower. The default will be to "grind higher", with occasional days of consolidation. That's not to say that we won't see occasional sharp moves of a full percent or more, but simply that quarter and half-percent moves are more likely.
 
Personally, I'll continue to be incrementally and selectively taking small portions of my gains to raise my rainy day cash reserves, as well as taking advantage of any dramatic (and almost always irrational) dips of my favored stocks.
 
-- Jack Krupansky

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