Tuesday, December 30, 2014

NASDAQ still seeking short-term direction as the year winds down

Yesterday could have been a day for NASDAQ to do a little consolidation after its run-up to to a new yearly peak on Friday, but their was just enough lingering enthusiasm or window-dressing buying to manage to close flat for the day. Although my personal, momentum-focused portfolio took a 0.86% hit, so there is clearly some rotation between stock groups and individual issues going on as well, which I also saw within my personal portfolio.

NASDAQ remains only modestly above the upper edge of its trading range, which is not quite a clean and solid breakout, which makes it vulnerable to a reversal. The slow trading of the holiday week make the situation all the more confusing.

Today is really the last full trading day of the week, with Wednesday being a half-day due to New Year's Eve, and although Friday is technically a full day of trading, it's sandwiched between a holiday and the weekend, so plenty of people will bug out early or even skip the entire day for an extended weekend and holiday week. Net-net, what happens during these holiday trading sessions is subject to revision and even reversal once all of the big dogs and heavy hitters return to their desks next week.

Although Friday is technically part of the new year, it could well trade as if it were part of the end of the year due to slow holiday trading. Besides, I wouldn't treat the first couple of trading days of a new year as an indicator. At least wait for the results of the first full week, to see how the heavy hitters follow-through after letting the first one or two trading sessions of that first week slide by as an easy setup for their more serious trading.

NASDAQ futures are down moderately, indicating a moderate dip at the open, but whether that dip leads to a significant sell-off or whether people buy the dip as they did yesterday is a coin flip.

Oil (OIL) remains locked in its tug of war in a trading range around $55 with $50 and $60 equally out of rich, at least for the moment. I came close to buying more on the dip yesterday, but the dip wasn't quite enough to trigger my 5% threshold, and then oil recovered a fair amount of its intra-day dip into the close.

I'll also continue to look for opportunities to raise my cash reserves on rallies. I almost sold a little of my Wendy's (WEN) yesterday.

-- Jack Krupansky

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