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The NASDAQ has had a bit of positive seasonality through the past two weeks:
The above chart shows the NASDAQ 100 index with its seasonal pattern. Last week and this are typically positive weeks for the NASDAQ. The seasonal heat is bright green, which speaks to the consistency of this positive pattern. However, there is no "yellow" shading because this positive period is less than 14 days long (yellow shading are markers for the strongest 5 seasonal patterns of 14 days or longer.) In fact we are through the best part of this positive period, and the NASDAQ 100 index is laboring under its daily DMA (displaced moving average) channel. Going forward, the seasonality begins to roll over with a negative period emerging that lasts into October. Ditto the S&P 100 Index:
The above chart shows the S&P 100 index with its seasonal pattern. Its seasonal cycle is less appealing with a negative bias that accelerates into October.
The action in stocks like DJ and TRB point out that even in a choppy and overbought market, there can be some interesting short squeeze plays:
The stock of DJ - Dow Jones got a boost a few days ago when rumors spread that the Bancroft family were considering putting their shares up for sale. Rumors come and go and fundamentally there may be better value plays, but the fact is that there are an excessive number of short sellers in DJ caught in the updraft. Almost 11 days of average daily volume were short DJ - most of them will be forced out in this move. It will be important to see how long price action remains positive, and how long the short intensity remains high.
The stock of TRB - Tribune Co. emerged last week in its own right. Downtrodden for years, TRB last week turned into a Type 1 short squeeze for the first time in over 4 years. In the past 3 months short interest soared as price sank to the $35 level. At the same time negative seasonality was in full force. TRB seasonality improves going forward, chopping a bit near-term, but turning very strong in early September. Provided short selling remains on the heavy side (we get fresh NYSE and Amex short interest data after the close on Friday), TRB could be an opportunity on any pullbacks later this month when its negative seasonality dissipates completely.
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