Bulls started Thursday in fine fighting spirit as semiconductor and enterprise software stocks posted strong gains. Bulls ruled the second half of the session. The tech-heavy Nasdaq 100 closed at 11,996, a loss of 1.8%, states Jon Markman, editor of Strategic Advantage.

I’m not surprised by the weakness. I wrote earlier in the week that bulls were likely to surrender a decline to the 200-day moving average for the NDX ahead of the February nonfarm payroll report on Friday. There is simply too much event risk given the Federal Reserve is now signaling that its Fed Funds rate will continue to move higher in the first half of 2023.

This abrupt policy change caught most professional money managers off guard. Only a month ago Fed Chairman Jerome Powell was talking about disinflation. The new directive changed the narrative in favor of bears. There is a decent chance bulls can regain momentum. They need the upcoming economic data to show softness.

This begins Friday with the February payroll report. There is important support for the NDX at 11,905, its 200-day moving average, then 11,867, the rising 50-day moving average. Bulls will face initial resistance at 12,156.

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