Monday, December 08, 2014

NASDAQ poised for a test of its trend

NASDAQ did manage to recover a fair amount of it's big sell-off from last Monday as the week progressed, but now its time to see how durable those gains are. Futures are down moderately as traders bet that a fair chunk of those recovery gains will quickly evaporate, but we will have to see if that turns out to be the case. Bets by traders frequently fail to align with changes in the risk posture of the hedge funds. It is not unusual for hedge funds to wait for traders and other short-term speculators to bet too much on a particular market trend and then bet the opposite and force a reversal of the short-term trend. We still don't have a solid short-term trend in place after the holiday week.
 
Futures may be down based on perceived weakness in China or anxiety about weakness in the price of oil. I would simply note that the U.S. stock market is primarily based on the health of the U.S. economy, which is still cruising along and incrementally improving with every passing month, albeit at too slow and uneven a pace for ADD-afflicted Wall Street traders and short-term speculators to get excited about. Oil prices are a mixed bag, with lower prices helping consumers, but reducing investment as well, so the net-net is probably a wash.
 
I still have a modest position in Oil (OIL). I'll pick up some more if it declines by 5% from my purchase price. It's near-term trend is not terribly clear other than a lot of ugly, negative, cynical sentiment, which is clearly a negative, but sentiment doesn't always translate cleanly into actual market activity.
 
I'm still getting ready for the IPOs coming later this week. Whether I will be likely to get any shares in the actual IPOs is not so terribly certain, so I expect to be buying shares in the open market. I'll also hold back a fair amount of my cash in anticipation of buying on any inevitable dips that occur in the weeks and months following the IPOs.
 
-- Jack Krupansky

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