Saturday, December 13, 2014

NASDAQ on verge of a mini correction within loose trading range

NASDAQ on the edge of what I call a "mini" correction (a decline in the 3-5% range), closing at a 2.88% decline from its recent closing peak and 3.27% below its recent intraday peak. We do have to be careful about interpreting market action on a Friday, since short-term speculators have a tendency to close out positions ahead of a weekend when anything can happen. We'll have to see whether the selloff on Friday "has any legs" on Monday and Tuesday.
Friday's trading was actually quite interesting, with a deep dip at the open followed quickly by sharp recovery bounce that erased almost all of that dip, followed by volatile trading with only modest to moderate losses most of the day, and deep losses only in the last half-hour of trading. That's too much volatility to indicate a reliable trend. And too much lingering bullish sentiment to indicate an outright bearish bias.
The 4600 level will be a key psychological test. The September highs were just below that level. Whether traders try and succeed at pushing below that level remains to be seen.
It's probably just as likely that NASDAQ will bounce and reverse to trade upwards within the 4600 to 4800 trading range.
We have a week and a half of trading left before the holidays kick in. It's not so clear whether hedge funds will want to be heavily short heading into the holidays.
I continue to follow oil a bit, but there is way too much noise in the marketplace to discern any clear signal. I mean, sure, we could easily see $55 oil this week, but I wouldn't bet too strongly either way. I strongly suspect that most of the negative news is now priced and even greatly overpriced into the market. I'll consider buying a little more Oil (OIL) since it is close to a 5% decline from my last purchase.
I didn't get any IPO allocations on Friday, but I did open small positions of HortonWorks (HDP), New Relic (NEWR), and Workiva (WK) as soon as they started trading. I had opened positions in Lending Club (LC) and Momo (MOMO) on their IPOs on Thursday. I think I'm done with IPOs for now. These are long-term positions. I may also open additional positions to trade on dips.
-- Jack Krupansky


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