Technology bulls lost ground on Thursday following stronger payroll data, yet they remain in total control, states Jon Markman, editor of Strategic Advantage.
The Nasdaq 100 closed at 15,089, a decline of 0.8%. The weakness accelerated after an ADP report showed the economy created 497,000 private payroll jobs in June, far in excess of the expected 267,000 positions.
Bears argued the more substantial number puts investors on alert that the Federal Reserve will continue to raise interest rates. That may be so, however, this is not news. The minutes from the June meeting of the Fed’s rate-setting committee Wednesday showed officials leaning toward additional hikes. And the ADP data supports the idea that corporate profits in the second half will be more substantial than bears have been forecasting.
Private companies don’t hire when they fear economic headwinds. More worrisome for bears, even with the losses on Thursday, they did not make much headway in taking out key bullish defenses.
The early decline did not eclipse 14,862, the rising 20-day moving average. And there was no material damage in the shares of the biggest technology firms. Microsoft (MSFT) and Apple (AAPL) actually posted modest gains.
The bottom line is that bears will need more than stronger economic data to scare off bulls hoping for better corporate profitability in the second half of 2023. Bulls are likely to continue to buy dips.
Sentiment remains enduring and resilient. There is critical support for the NDX at 14,862. Overhead resistance is 15,255, then 16,573, the November 2021 record close.
The NDX Loop: Members bought ProShares Ultra QQQ (QLD)—a 2x leveraged ETF that tracks the Nasdaq 100—at $63.00 on June 28. It closed at $63.64 on Thursday. Set up to sell half the position at $70.59 lmt gtc, and half at $75.70 lmt gtc. Set stop at 59.34 stp
