Thursday, January 22, 2015

NASDAQ remains volatile as it seeks to find its new trend

Once again we had a very mixed bag for NASDAQ on Wednesday, with a moderate dip at the open, then a sharp recovery bounce, and then a partial sell-off of those gains. The net was moderately positive, but with a bit too much tentativeness and lack of commitment. The good news is that we have two days of building on Friday's rally. We are still at risk of a sell-off of these gains, but so far the mixed bags have netted to a positive trend. Again, I still think we have a solid chance that Thursday and Friday really were the bottom of the swing down off the  December peak, although I do also have to admit that this is no slam dunk and risks abound.

We'll see some extra volatility today due to reaction to the announcement of the quantitative easing monetary policy (QE) by the European Central Back (ECB). This announcement was a slam dunk and much anticipated, so any initial buying enthusiasm could well be sold off. OTOH, there will be a lot of relief that this uncertainty has been removed.

NASDAQ futures are up moderately sharply, indicating a healthy pop at the open, but once again we have the uncertainty of whether people really will pile on to the opening pop for an extended rally, or whether we will see more selling into any rallies. For example, the net rally of the past two or three days may have been a rally in anticipation of the ECB QE, so now we could well see a classic example of "buy the rumor, but sell the news."

My bottom line is that I remain fully invested and optimistic, but with reserves to take advantage of any dips.

Pricing for the IPO of Box (BOX) occurs tonight. I have registered an indication of interest (IOI) with Fidelity, but I have yet to get an allocation for any IPO from them. In any case, I expect that by 11:00 AM tomorrow I will be a shareholder of Box. I'll open a modest position at the open and then buy more on dips and maybe play swings as well.

I'm a buyer of Lending Club (LC) on any dips. This is a long-term bet for me, but I may play 5% swings as well.

Oil (OIL) has been hanging in there surprisingly well after the recent bear market. We're still in a trading range as the bullish and bearish speculative camps duke it out, but you have to be at least a bit optimistic even as the risks for a further bearish move are very real. I'll continue to play 5% swings.

-- Jack Krupansky

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