Technology bulls simply can’t catch a break. The Nasdaq Composite index closed Tuesday at 10,547, unchanged on the session, states Jon Markman, editor of Strategic Advantage.

The pause breaks a four-day losing streak, yet the price action was far from ideal for bulls. Tesla (TSLA) and Apple (AAPL) got hit with new downgrades before the opening, leading to more early weakness for the growth stock benchmark. 

The downgrades come even though both stocks are trading at their respective 2022 lows. Tesla shares are down 56% since the middle of September, a remarkable decline. The silver lining for bulls is both stocks, and many other large tech names are now deeply oversold, and under-loved by Wall Street analysts.

That is not a bad thing. Analysts have a history of being surprisingly bullish at stock price peaks, and overwhelmingly bearish at bottoms. Unfortunately for bulls, there has been little indication thus far that buyers are interested in scooping up the discounted shares. 

Tuesday was another distribution day, and there is no meaningful support for the Nasdaq until 10,262, the November low. If that level fails the next downside target would be 10,089, the October bottom. I’m still inclined to sell a rally to 10,600, the first resistance level. 

The Trade: The current position is the WisdomTree Bloomberg Floating Rate Treasury ETF (USFR), a cash alternative.

I went into Tuesday prepared to recommend a new bearish position for the Invesco QQQ Trust (QQQ) but strength for the broader markets kept us on the sideline. With so many big tech stocks deeply oversold, I’m worried about getting caught in a violent short squeeze. Getting this entry-level right, so close to year-end, is important. I may send a new recommendation on Wednesday via an intraday update. 

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