Friday, January 09, 2015

NASDAQ poised for a breather

The two-day NASDAQ rally was quite impressive, but will be a hard act to follow. It wouldn't be unexpected for NASDAQ to take a little breather for a little consolidation at this stage even if it is indeed headed for a new 52-week high shortly.

There is still the possibility that this latest advance might be little more than a big dead-cat bounce or short squeeze short-covering rally, so it will take a anther few days or even a week for the dust to settle and the trend to become more clear.

Sure, I'll settle for the big win, but I'm still cautious about what lies ahead.

NASDAQ futures are up moderately on the positive jobs report, indicating a moderate pop at the open, but as usual it is a coin flip whether people will pile on to that initial pop for a sustained rally, or whether they will sell into that rally for either a modest amount of consolidation or even a renewed sell-off.

It's also a Friday, so a fair portion of short-term speculators will tend to close out positions ahead of the weekend when anything could happen. But, if their open positions are short positions, closing means buying, so the net effect is uncertain.

Banco Santander (SAN) had been a big win for me and I had great confidence in them as a Latin America play and for their dividend, but their decision to chop two-thirds of their dividend is too much. I even managed to buy some more yesterday on the dip before I read the news - 99.99% of the time I do read the news carefully before any dip buy, but SAN had been so reliable before, until now. Well, I'm done with them now and will be dumping my entire position, at a steep loss, at the open. Good riddance. I have plenty of more interesting stocks I would like to buy, like Electronic Arts (EA) and Garmin (GRMN), or even TD Bank (TD) or Bank of America (BAC). And there are a bunch of biotech stocks I am looking at as well - some that pay a better dividend than the new SAN dividend.

Oil (OIL) is still unsettled, but at least isn't diving as sharply lately. I'm convinced that a lot of the recent sell-off is more speculative than about actual supply and demand. Oil used to be a safe bet for speculative intermediaries, but now that its not, people are struggling to figure out what the new normal is for oil. We certainly may not have reached a bottom yet, but I will continue on 5% dips.

CMD FedWatch is reporting only a 56% chance of a Fed rate liftoff in even September, and a 75% chance in October, so forget about a Fed hike in June or before the end of the Summer. There is only a 17% chance of a Fed hike in June.

-- Jack Krupansky

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