Technology bulls were winning Wednesday until a wave of sell programs in the last half hour ravaged the Nasdaq 100. The index closed at 12,567, down 1.4%, states Jon Markman, editor of Strategic Advantage.
The press conference following the Federal Open Market Committee meeting played a big role in the decline. Federal Reserve chair Jerome Powell told financial reporters that the recent demise of several banks could slow the economy, yet it is prudent to continue to raise the Fed’s key banking lending rate. Further, his description of the banking system as “sound and resilient” rang hollow in light of the influx of banks seeking emergency liquidity.
Reuters reported last week that banks took $304 billion in loans from the Federal Home Lan Bank System, a depression-era lender of last resort. Yikes.
Tech has been the leading sector since January, and the decline on Wednesday did not put key stocks in jeopardy of losing their uptrends. However, bulls need to regroup during the rest of this week. The NDX has critical support at 12,313, then 12,129, the 50-day moving average.
I expect opportunistic buyers to emerge at those levels. In the near term, bulls will face important resistance at 12,950, Wednesday’s high.