Bears got a deluge of new ammunition on Friday, yet they could not take back the gains made earlier in the week by bulls, states Jon Markman, editor of Strategic Advantage.

The Nasdaq 100 closed on Friday at 12,573, a loss of 1.8. However, the benchmark gained 3.4% for the week, its fifth consecutive weekly advance. The gains came despite news the economy in January added 517,000 new jobs, far above the consensus estimate of 187,000. And after the close Thursday, (AMZN), Alphabet (GOOGL), and Apple (AAPL) all reported weaker-than-expected financial results. Only shares ended near the session lows. After sputtering to a 6% decline in the premarket, Apple shares ended Friday 3.6% higher.

Bears so far can’t get any traction. Their heavy artillery is stuck in the mud of their own making, messy narratives about investor optimism, inflation, and a hawkish Federal Reserve. There are some problems. There is too much speculation in broken, near-bankrupt companies. The current pullback is necessary to relieve some of these excesses. Look for buyers to resurface on the first pullback for the NDX to key support at 12,166. If that level fails, there is further support at 11,960, the 200-day moving average.

The QQQ Loop: The current position is cash or a cash equivalent like WisdomTree Floating Rate Treasury ETF (USFR). Now prepare to tap those funds to make the following trade:

  • Place an order to buy ProShares Ultra QQQ (QLD) at $43.70 lmt gtc.
  • If filled, set up to sell half of the position at $49.30 lmt gtc, and half at $58.20 lmt gtc.
  • If supplied, place a stop loss order at $39.00 lmt gtc.

If this trade works, the upside targets are +13% and +33.2%. The potential downside risk is -10.7%.

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