Monday, December 01, 2014

NASDAQ poised for a little consolidation after the holiday week

The big dogs and heavy hitters will be back at their desks this week after a break for an extended holiday week. NASDAQ had a nice rise last week, but it didn't mean a lot without the main market participants in play. So, over the next couple of days we will get to see what these holiday revelers actually think about what happened while they were partying. As the old saying goes, when the tiger is away the monkeys rule the jungle. Preliminary digestion of the preliminary holiday retail sales data will be a key factor as well. It is unclear whether the big drop in the price of oil will be a significant factor, but it will be a factor.
 
Retail sales numbers will be tricky because sales continue to shift to online purchases, with today being Cyber Monday, and even in-store sales have been shifting in both directions, earlier and after Black Friday itself, so that in-store numbers from Friday and the weekend don't tell the whole story. The preliminary chatter about online sales was as positive as the in-store sales were negative, so... go figure.
 
I sold a fair amount of stock on Friday to lock in profits and raise my cash reserves so that I can capitalize on any big dips in individual stocks.
 
I'm still toying with whether and when to take a flyer on oil via an ETF such as (OIL) or (USO), possibly with call and put options. Or I may pick up some more Solar City (SCTY) and Tesla (TSLA), which seem to be hit a bit on the presumption that cheaper oil makes alternative energy less attractive, but I think we're past that stage, although traders will still play that angle.
 
The bottom line is that the significant advance of NASDAQ in recent weeks leaves it poised for at least a little consolidation, even as the U.S. economy continues to improve incrementally, which is the ultimate metric by which to judge the stock market.
 
-- Jack Krupansky

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