Tuesday, February 10, 2015

NASDAQ to bounce, but will it stick?

Okay, we had a second day of consolidation on Monday, but it was not too bad, especially considering all of the negative chatter about Greece. Today we are poised to see a nice recovery bounce, with futures up sharply. There is a good chance this bounce will stick and erase the consolidation losses of the past two days, but as usual, there is a high degree of uncertainty as to what bias the hedge funds will take, whether enough of them will switch to a risk-on bias and fuel the rally, or whether too many of them stay negative or even decide to flip the switch and go outright risk-off to trade the market back down in its wide trading range.

If enough of the hedge funds do jump on board, we could see a 75 to 100 point rally. Yeah, it is indeed possible, but unfortunately it is just as likely that they will sell into the opening rally and aim for more trading of range volatility. Either way, I'm prepared to work with either kind of market.

The German DAX stock index is up nicely this morning, suggesting at least a little enthusiasm that German leaders will find some way to resolve the debt crisis with Greece. U.S. stock index futures may simply be up based on that news alone, but I'd be skeptical about that. I mean, yes, I personally am optimistic that Greece will get resolved, but not so quickly or easily. OTOH, the negative chatter has been way out of control, so maybe we are just seeing a relative positive in the sense of a reduction of the excessively extreme negativity to something at least somewhat closer to rationality.

I am currently long the Greek stock ETF (GREK), but I'm mostly playing the volatility. Ditto for Oil (OIL).

I did take some profits for Lending Club (LC) on its nice pop, but I'll be looking to buy on any further dips as well.

Overall, I remain fully invested in growth stocks for my investment portfolio, and over-invested in my trading portfolio as well. I still have reserves for deeper corrections, but I am probably too invested to be completely comfortable. I do need to dial back my risk a bit, but I see too many attractive opportunities.

I did buy the huge 31% dip of Coupons.com (COUP) on their quarterly report after hours. I currently have a small investment position, but I'm lukewarm on them. I may just play them for the volatility, but I'm not terribly optimistic about their prospects.

-- Jack Krupansky

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