Thursday, February 05, 2015

NASDAQ poised to continue its advance

Okay, we had a little consolidation for NASDAQ yesterday, but other than the minor hiccup at the end of the day due to confusion about Greece, it wasn't too damaging, so today NASDAQ is poised to gather its strength and start a new leg upwards, although we do still remain within the wide rough trading range, for a little bit longer. Granted, this is not an absolute slam dunk and all bets are really off in such a volatile market, but at least this looks like the higher probability path for the moment. Sure, Greece will flare up on occasion, oil will sag some more on occasion, and various quarterly reports will disappoint on occasion as well, but it is worth pointing out that a true and resilient bull market does indeed climb a wall of worry.

NASDAQ futures are up moderately sharply, indicating a big bounce at the open, but as always it remains to be seen whether that bounce stick and and people build on it for a big rally, or whether people take a risk-off bias and sell into any rally. I lean towards the former, but the latter is a very real risk. In either case we are at the complete mercy of the collective bias of the hedge funds, which can and does change at every moment.

There is a growing chorus calling for a delay in liftoff for Fed interest rates. That's fine, and a good thing for the markets, but fed funds futures were already indicating that liftoff would not be until the fall anyway. Futures currently indicate only a 47% chance of liftoff in September and a 65% chance in October, with a 69% chance of a second hike in January, so there is absolutely nothing for people to be alarmed about in terms of rising rates for the coming months.

Greece and the EU and ECB are just in the early stages of a long and protracted dance to renegotiate the terms of the bailout for Greece. I agree with both sides - Greece desperately needs some significant relief, but there is a very real moral hazard if the relief comes at too cheap a price. It may take months for this initial phase to play out. I am once again long the Greek ETF (GREK).

Oil (OIL) remains volatile and supply and demand are indeed real issues, but I don't buy the narrative that this is a one-way market downwards.

I'll continue to be a buyer of my preferred names on any big dips. And I am a true believer in Lending Club (LC) as a really big deal.

-- Jack Krupansky

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