NASDAQ continues test of Friday's bounce

NASDAQ had a mixed day yesterday, with futures up strongly and a nice pop at the open, then an immediate reversal and ski run down to moderately red for awhile, but then another reversal and eventually a moderate rally into the close. Although NASDAQ closed the day with a moderate gain, it actually closed slightly lower than the opening level, which is a decidedly mixed bag. So, today the test resumes, this time on the flip side with futures pointing to a moderate decline on the open. Once again, futures are an unreliable indicator of how stocks will trade through the day, although technically they did a great job of pointing to the closing level yesterday, but that was more of a fluke.

I expect today to be another day of consolidation, with some people continuing to book profits from Friday, while others are buying stocks that are still very depressed from their December level. How that all balances out for the overall market indexes is unclear, but once people have completed the bulk of their rebalancing we will then start to see the trend emerge. Again, it's not a slam dunk that Friday was the bottom, so we need to see a confirmation of either resuming the advance within the next few days, or we risk seeing a renewed sell-off to set a lower low within a week.

One likely scenario for today is a dip at the open followed by a rally with people buying the dip. Whether that rally sticks for the day is another matter. A close that is only moderately higher or moderately lower is the more likely scenario, but certainly not a slam dunk. We remain in an all bets are off market.

Basically, people are still trying to decide whether Thursday and Friday were really the bottom for the swing off the December peak. It's all in the hands of the hedge funds and whether they will resume shifting from a risk-off to risk-on bias.

For my personal portfolio, Tuesday was a very mixed day, roughly flat with half my stocks up and half down.

I need to decide whether to sell some of my Netflix (NFLX) that I bought recently to add to my longer-term position. Capturing a 20% gain is certainly tempting. I'm in for the long term, but the stock does have a lot of volatility worth playing.

Oil (OIL) continues to bounce around seeking its bottom. The good news is that it's been in a rough trading range for over a week now, volatile, but with no strong sense of the steep downward trend it had until then.

-- Jack Krupansky