Monday, January 26, 2015

NASDAQ will continue to consolidate before continuing advance

NASDAQ actually hung in there fairly well on Friday despite the mere 8-point gain. We had a fair amount of consolidation without giving up too much. We are likely to see more of that today. People are not quite ready to truly believe that we our out of the woods yet and on a path to a new 1-year high within the next two weeks. We're barely 1.25% away from that goal right now.

It is very possible that we could see some evaporation of the recent gains, but maybe that's lot quite as likely as a continued advance.

It is also very possible that on one of the inevitable dips that we'll see during consolidation, just when people seem ready to throw in the towel to protect recent gains, that out of the blue a bunch of the hedge funds will decide to catch people leaning the wrong way and go whole-hog risk-on to kick off the next leg upwards to that new 1-year high above the December peak. That's not a slam dunk by any means, but well within the realm of possibility for this year's stock market, with wide swings in a trading range, coupled with occasional new 1-year highs and new short-term lows.

NASDAQ futures are actually up moderately, after having been down moderately sharply overnight in reaction to the stunning victory of the far-left anti-austerity party in the Greek election, indicating a moderate pop at the open, but it is a coin flip whether people are really ready to pile on for further gains so quickly, or whether they are more in the mood for more consolidation and will sell into rallies.

Hedge funds are trying to take a run at pounding Lending Club (LC) into the ground, as their almost always do with new, hot stocks. They could well succeed at driving the stock down to new post-IPO lows, but I will be a buying of any further dips. I'm a long-term holder, but I'll also take some extra positions for trading short-term swings of 5% or more.

I sold half of my Box (BOX) position for a 10% gain, but I'll be a buyer on any big dips below my entry price of $20.20.

GoPro (GPRO) has a lot of volatile swings worth trading. I have a long-term position, but these wild swings are too tempting.

Oil (OIL) remains in its rough trading range as the bullish and bearish hedge funds continue to duke it out. Maybe we will see $40 oil before a bounce to $50, but we are no longer on a trend for that to be a slam dunk. I'll continue to play 5% swings.

Oh, and earnings season remains underway. Reactions to both positive and negative reports vary greatly, making it a great time to book gains and to pick up deals on dips.

-- Jack Krupansky

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