Technology bulls were beaten back on Friday as normal end-of-the-week profit-taking ensued, states Jon Markman, editor of Strategic Advantage.
The Nasdaq 100 closed at 15,566, essentially unchanged. Bears are pretending the decline for the benchmark Nasdaq 100 from the highs on Friday was an important victory. That is charitable. The shares of big technology companies have posted impressive gains in the first half of 2023, and now there is ample evidence professional investors are turning their attention to smaller firms. This broadening effect isn’t normally the end of a stock market move; it is the beginning.
There is good reason to be bullish. Pros are looking past the possibility of a second-half recession. They are keenly focused on a period in which the Federal Reserve has stopped raising its key bank lending rate and corporate leaders have greater visibility. That point could come could on July 26 when the next Federal Open Market Committee policy statement is due.
Barring an abrupt change in the prevailing narrative, bears must play defense. Every decline ahead of the FOMC is likely to be short-lived. Positive corporate financial reports will lead to outsized gains as pros throw money at winning storylines, and exasperated bears cover positions.
The Nasdaq 100 could easily melt up given the dearth of sellers. Support for the benchmark has risen to 15,065, the 20-day moving average. There is no important resistance until 16,573, the November 2021 record close.
NASDAQ 100 Timing: Members bought ProShares Ultra QQQ (QLD) - a 2x leveraged ETF that tracks the Nasdaq 100—at $63.00 on June 28. Friday's close was $67.58. Set up to sell half the position at $70.59 lmt gtc, and half at $75.70 lmt gtc. Set stop at 61.21 stp
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