Wednesday, April 15, 2015

NASDAQ still stuck at the crossroads, hoping Intel will provide a catalyst

NASDAQ remains stuck a stone's throw beneath the magical psychological 5000 level. The modest declines of the past two days have been dispiriting, but haven't changed the overall picture or outlook significantly. Part of the problem has been concern that we might be facing an earnings recession - too many companies not revising their outlooks upwards. Maybe Intel (INTC) will break this logjam of stagnation, with either a decline on disappointment with their quarterly results and outlook,  or maybe a relief rally on relief that they didn't have even worse news than was expected. Or, maybe the market will yawn at Intel's lack of definitive positive or negative news and continue with the narrow range trading of recent sessions.

NASDAQ futures are up moderately, probably on relief that Intel didn't have worse news, indicating a moderate rally at the open. As usual, we must note that futures and the opening move are not reliable indicators of the market trend for the rest of the day. I do think it is very likely that we will see a decent relief rally based on Intel, but there is an equal probability that hedge funds will simply sell into any rally, based on the lack of a stronger upwards catalyst.

In any case, we are at the complete mercy of the hedge funds and whether they decide to crank their risk exposure up or down, based primarily on expectations of which direction the market might move faster. The recent upswing has run out of steam, but that's no guarantee that anther major downswing will gain more momentum than either a renewed upswing or more rapid swings in a narrower range. The recent modest declines may simply be a classic case of the market taking a breather between two legs of a larger advance.

Fed funds futures have pulled back a little, with October being a bit less than a coin flip (47%) for liftoff, with December being the more likely time frame for liftoff, but even then with only a 58% chance. A second hike in March is only modestly better than a coin flip at this stage. Personally, I expect the economic data to improve over the coming months, so that October, and maybe even September, will once again be the more likely time frame for liftoff. Either way, interest rates will remain quite low for an entire year, which is well beyond the radar horizon for most traders and short-term speculators.

I finally wrote all of my tax checks yesterday and will finally have the relief of mailing them today. Still, they won't be completely off my mind until they debit my checking account and I once again see exactly how much cash I really have to work with going forward. Hopefully in a week I can start getting my trading back to a reasonable pace.

I'm doing some research on likely tech IPOs for the rest of the year, so that I can reserve enough cash for them, both for long-term positions and for short-term trading of swings.

-- Jack Krupansky

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