Bears pounced Thursday, taking full advantage of weakness in the shares of two large technology companies following their earnings reports. The Nasdaq 100 slumped to 15,466, a loss of 2.3%, states Jon Markman, editor of Strategic Advantage.

Tesla (TSLA) and Netflix (NFLX) shares skidded 9.7% and 8.4% despite generally robust results. Tesla executives said that second-quarter sales reached $24.9 billion, up 47.3% year-over-year. Paid subscriptions at Netflix grew by 5.9 million members, an 8% increase versus a year ago. The streaming media giant also raised third-quarter revenue guidance to $8.5 billion. However, when shares of both firms started Thursday lower, bears piled on.

Since the start of 2023, sellers have argued corporate estimates are wildly optimistic. With earnings coming in ahead of plan, that narrative changed to all of the good news being baked into current prices. Bear says this will all become apparent when prices fall despite great results. It’s a compelling story to tell, especially when two market leaders get nearly 10% haircuts.

Unfortunately, the idea that stocks are overpriced despite improving fundamentals is not likely to win over many professional investors. They are still trailing the unmanaged benchmark. This year has been painful, and they want the hurting to stop. Pros are likely to buy the dips, and they are finally getting one.

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For most, a decline to 15,275, the rising 20-day moving average, will be a gift. That level is in-play during the next two sessions, and we should expect bulls to take full advantage of the better entry points. The first resistance point for the benchmark is 15,932, the high on Wednesday.

NASDAQ 100 Timing: Members bought ProShares Ultra QQQ (QLD)—a 2x leveraged ETF that tracks the Nasdaq 100 —at $63.00 on June 28, and sold the first half of that position on July 19 at $70.59, a gain of 12.1%. That’s great for a three-week hold....Now set up to sell the second half at $75.70 lmt gtc. Set new stop at 64.53 stp.

Learn more about Jon Markman here...