Bears were run over on Thursday amid a big rally in Tesla (TSLA) shares, states Jon Markman, editor of Strategic Advantage.
The Nasdaq 100 surged 2% to 12,051. The advance puts the benchmark NDX above its 200-day moving average for the first time since March 29, 2022, when the index closed at 15,239.
It is noteworthy that tech shares collapsed shortly thereafter last year. The bulls are in better shape now than they were ten months ago. The sentiment is improving as professional money managers look past the global economic slowdown. And the Federal Reserve is likely to flinch in its battle with bond traders to push short-term interest rates toward 5%.
The next Federal Open Market Committee meets on February first. In the interim bulls should face little opposition. Overhead resistance for the benchmark is currently 12,640, the level of the September 12 gap. Barring a substantial pullback through the FOMC meeting, bears will ultimately concede that advance. Critical support for the benchmark is 11,460.
The QQQ Loop: The current position is the WisdomTree Bloomberg Floating Rate Treasury ETF (USFR), a cash alternative.
ProShares Ultra QQQ (QLD) opened Thursday near my upside target at $41.95 and never really came back to a safe entry level. With the NDX now at its 200-day moving average, it is time to be more cautious. Wait for the next setup.