Friday, February 06, 2015

NASDAQ poised to test upper edge of trading range

This NASDAQ advance has started to show some resilience. Now we arrive at another moment of truth as we approach the region of the upper edge of the broad trading range and NASDAQ will need to decide whether it really is ready to punch through to a new 1-year high, or whether the hedge funds will once again flip the switch to revert from a risk-on bias to a risk-off bias and trade back downwards in the trading range.

As usual, all bets are off in this crazy market prone more to trading ranges than sustained advances (or declines), but the bias does appear to be upwards, especially now that weaker players have been severely chastened by the market weakness we experienced in January. IOW, expect the unexpected, but be prepared for anything. If that makes any sense. But it makes as much sense as most of the daily market moves. It's not that there isn't a method to all of this madness, but simply that each market participant, especially all of the hedge funds trying to boost their returns by short-term swing trading, gets to decide their own method and the net market movement is the sum of all of these disparate methods.

NASDAQ futures are up moderately on a decent jobs report, indicating a moderate pop at the open, but it remains to be seen whether people pile on to continue the advance, or whether they take a more cautious stance and sell into rallies.

It's a Friday again, so a good fraction of short-term speculators will tend to close out positions. If they were net long then they will sell, but if they were net short they will be buyers.

I'll be buying dips on all my quality names, which include Expedia (EXPE), GoPro (GPRO), and Yelp (YELP). And maybe even Pandora (P), but I'm only lukewarm on them.

I may also take some profits off the table for trading positions in LinkedIn (LNKD), Oil (OIL) and Twitter (TWTR) on their big pops. But I will remain long on them.

-- Jack Krupansky


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