‘Covering Bases’ As First Quarter Closes

This week has been interesting for traders trying to “cover all the bases.”

Heavy selling to start the week, a wildly mixed Tuesday, and a Wednesday rally soured by the Dow as traders face an early end to the week because of the Friday holiday.

What’s next with the first quarter ending and a long weekend ahead?

Fitting with the market, plans and expectations are mixed.

Key indicators are revealing a variety of squeeze signals in choppy conditions without strong confirmation on direction.

The nasty back-and-forth trading in the Nasdaq is an example of how this sideways action might play out. Only time will tell if this is a sign of something sinister to the downside or a bottom with a rally into new highs.

This end-of-quarter movement is similar to the same time period last year. The market tanked due to the pandemic and began recovering by the end of March. The first quarter this year has followed a similar pattern — without the severity of the pandemic.

This movement coincides with how the market historically likes to “follow the trend” and end the time period on a higher note. Expectations are for movement higher through the holiday. 

Still, Simpler’s traders are avoiding aggressive plays and maintaining a cautious outlook. The “hurry up and wait” mode is still a plan to close the quarter and consider how the market settles in for a long weekend.

Thursday’s opening is expected to set the pace and maybe the direction for the following weeks.

We Saw: Mixed market trying to gain momentum — 

• Read politicians’ lips — more taxes on the way
• Nasdaq shifts gears to move higher
• Dow stumbles into close to go lower

We’re Watching: Defense of positions into quarter’s end —

• Did Nasdaq deliver bottom and support?
• Or is the Nasdaq squeeze just a choppy tease?
• Setups that won’t trap us into early expirations