Tech bears ended last week with plenty of promise, states Jon Markman, editor of Strategic Advantage.
Worldwide price cuts at Tesla (TSLA) for its electric vehicles seemed to strengthen their view that the global economy is collapsing. However, Tesla shares, and the tech-heavy Nasdaq 100 index (NDX), reversed the sharp early decline.
The benchmark NDX ended Friday at 11,541, a gain of 0.7%. Some of this was simple short covering, yet there is another force at work. Bulls are betting that global inflation and interest rates have peaked. They are looking past two quarters of lousy corporate earnings, wagering that the second half of 2023 will bring strong growth.
With that in mind, it’s easy for bulls to argue that the beaten-down NDX will see a flood of new buyers. The benchmark last week soared 4.5%, easily eclipsing the 2.7% gain for the broader S&P 500.
I expect that trend for continue as the NDX rebounds from a 30% drubbing in 2022. The benchmark on Friday briefly tested its 50-day moving average at 11,360 before turning sharply higher.
There is now important resistance at 12,135, the 200-day moving average. Bears should concede that advance. I recommend buying sharp pullbacks.
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