Technology shares started Friday stronger, even as banking issues swooned, states Jon Markman, editor of Strategic Advantage.

However, in the end, fear of a banking crisis and normal Friday selling sent the Nasdaq 100 to a modest loss. The benchmark fell to 12,520, a decline of 0.5%.

Bulls are building a strong narrative around tech stocks. Enthusiasm for a new AI-based upgrade cycle and falling interest rates are central to the thesis. As the banking crisis steals the headlines, the yield for the 10-Year Treasury bond has fallen back to 3.4%, the lowest level since September 2022.

The impetus is strong for professional money managers to get ahead of even lower rates as the Federal Reserve pivots away from the hawkish policies that drove rates higher. All of this should become more obvious on Wednesday when the Federal Open Market Committee meeting concludes. Any outcome that does not include a 50-basis point increase in the federal funds rate will cause more frantic short covering by bears.

In the interim, bulls need to hold the breakout level for the NDX now at 12,250. There is further support at 12,030, the 50-day moving average. Bulls are still set up for a larger move higher to 13,750, the August 2022 highs, if these developments lock into place.

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