Technology bulls slipped early Tuesday, however, buzz about an upcoming share offering for a key semiconductor firm, and strength for Tesla (TSLA) put bulls on stronger footing, states Jon Markman, editor of Strategic Advantage.
The Nasdaq 100 closed at 15,508, a gain of 0.1%. The early reversal is significant. Technology shares last week showed relative weakness. Many bears started to talk about stretched valuations and a seasonal swoon. The ARM Holding IPO may force bears to alter that viewpoint.
The British designer of ultra-low voltage semiconductors has a virtual monopoly when it comes to power-sipping design. Its intellectual property is licensed by Apple (AAPL), Samsung, and Qualcomm (QCOM) to design the mobile chips that power smartphones, vehicles, and Internet of Things devices.
Nvidia (NVDA), Amazon.com (AMZN), Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT) use ARM tech to power up everything from artificial intelligence gear to supercomputers. ARM is a foundational business in the development of next-generation computing.
Investment banks are now valuing the business at $57 billion, according to a Wall Street Journal report. That buzz on Tuesday lifted the entire semiconductor sector. Meanwhile, Tesla shares sprinted higher after the electric vehicle company officially revealed its updated Model Three mid-sized sedan at a German auto show.
Tesla shares closed at $256.49, a gain of 4.7%. The rally leaves the stock at exactly its 50-day moving average. A strong showing in the second half of this week for Tesla shares would put bears in a tough spot.
The stock could easily rally back to $300 in a wave of analyst upgrades. The Nasdaq 100 has important support at 15,259, its rising 50-day moving average. That should be a good place for bulls to enter new long positions. Resistance is 15,637, the gap from the big decline on August second.
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Buy the ProShares Ultra QQQ (QLD) at $63.50 or less. If filled, set up to sell the entire position at $71.20, and set stop at $60.33.
