Thursday, February 12, 2015

NASDAQ poised to set new 1-year high

Relief over a ceasefire deal in Ukraine and the fact that Greece still shows some, admittedly vague, promise of resolution may be enough to push NASDAQ over the top today, to a new 1-year high. We did indeed have a little breather yesterday but still managed to advance modestly to within striking distance of the December 1-year peak. The main question for the day is not whether NASDAQ rallies above the 1-year peak, but how much of that rally sticks vs. how many people sell into the rally.

On Wednesday NASDAQ managed to close above the November peak but below the December peak. Sure, it did close above the psychological 4800 level, but just barely and it was touch and go for much of the day. That lack of enthusiasm and commitment is certainly disheartening, but the good news is that this is completely consistent with the thesis that a bull market climbs a wall of worry, but just not in a nice straight line.

NASDAQ futures are up sharply on news of the Ukraine deal, indicating a sharp pop at the open, but as usual, the great unknown is the degree to which people will pile on to that rally and kick off more forced short covering to send the market dramatically higher, or whether enough people sell into the rally to turn it around into a sell-off. We could indeed see a 75 to 100-point rally, or maybe just another 10 to 25-point gain, or even a modest to moderate loss. I know that seems like a real cop-out of a forecast, but that is how volatile and crazy and outright unpredictable this market it.

Ukraine and Greece are not really big issues for the market per se, but they do provide traders and speculators with convenient cover to push and promote and otherwise pursue their chart-based technical trading strategies, paying lip service to fundamentals and long-term economic and business prospects.

Fed funds futures are still indicating liftoff in September and a third hike to 1.00% in January, but with the second hike now in October rather than December. Either way, the stock market will be insulated from rate hikes in the coming months.

As usual, I'll be taking profits for trading positions that have 5% gains, and buying any big dips for my chosen stocks. I remain fully invested in my main investment portfolio. I am heavily invested in my trading portfolio, but with reserves for additional dips and market corrections.

-- Jack Krupansky

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