NASDAQ struggling to find short-term trend
That was yet another semi-decent rally on Wednesday for NASDAQ, but still only semi decent and not even a full one percent, let alone the 1.25% that I would look for to signal a strong rally. IOW, we're still drifting sideways in a wide trading range, with no clear short-term trend. We may drift back up to the 5000 level again, or maybe back down to the 4800 level, but there is no strong sense of conviction for either a bullish advance or a bearish correction.
Earnings reports may or may not provide sufficient catalysts for stronger market moves, but for the moment they may just provide lots of volatility to fuel range-trading moves and sharp moves in both directions for individual stocks. There will be plenty of dips to buy for individual stocks.
Q1 was indeed dogged by disappointment over earnings growth and the outlook for Q2. Q2 should indeed be better, but so often the whisper numbers take the wind out of the sails of even decent numbers.
NASDAQ futures are bouncing around, not sure whether they want to be up or down, indicating a mixed market open, maybe up a little, maybe down a little. People are waiting to see what the next moves are for the hedge funds - will they add risk (buy) or take more risk off the table (sell), which has more to do with speculation about short-term market swings rather than much to do with longer-term economic and business fundamentals. Of course, we must always note that futures and the opening move are not reliable indicators of the trajectory of the market for the rest of the day.
Fed funds futures are still indicating December as the more likely time frame for liftoff of interest rate, but with almost a coin-flip (49%) chance of liftoff in October. The odds favor the fed funds target rate being only 0.75 in a year. This is a double-edged sword, with low rates being supportive of stocks, but a relatively weak economy being a drag on revenue and earnings growth.
-- Jack Krupansky