From the May 01, 2012 issue of Futures Magazine • Subscribe!

Nasdaq talking in binary

Hot commodities

Although it went nearly straight up for the first three months of 2012, the Nasdaq 100 has pulled back through much of April. Now, in the heart of earnings season, the index faces a possible turning point, but there are a number of factors in play.

Kurt Kinker, chief market analyst at Mirus Futures, says Apple alone became a major force in the Nasdaq’s rise and recent fall (see “Running binary,” below). “It really has become a force of its own. With the rally it had over the last year, it really drove the Nasdaq,” Kinker says. Uncertainty is coming into the index because of rumors about rebalancing it, he says. That causes a lot of institutional investors to sell their Nasdaq positions. Kinker sees support for the Nasdaq at 2570-2530 and resistance at 2675-2690.

Nasdaq/Apple chart

Keith Springer, president of Springer Financial Advisors, expects the index to turn around and make up lost ground. “It’s just a pullback. There’s always concern that earnings will slow and profitability will slow for these companies,” he says. “These companies have figured out productivity levels perfectly, though. They’ve adjusted their workforce to produce exactly what they have demand for.” Although he expects the Nasdaq to begin moving higher, he also expects it to peak sometime later this year, but holds out that a third round of quantitative easing from the Federal Reserve would be a boom. Springer puts short-term support at 2620 and resistance at 2750.

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