Technology bulls regrouped on Monday, after being beaten back late last week, states Jon Markman, editor of Strategic Advantage.

The Nasdaq 100 closed at 15,225, a gain of 0.2%. The rally for the benchmark was not enough to retake 15,312, the rising 50-day moving average. Interestingly, the NDX reached an intraday high of 15,269 before a modest decline into the closing bell. The session was a mixed bag. Shares of Apple (AAPL) got a pair of upgrades on better demand for its iPhone 15. Shares jumped 1.7%. 

However, the index was weighed down by shares of Tesla (TSLA). The electric vehicle stock lost 3.3% after a research note for Goldman Sachs warned of margin pressures. Analysts believe Tesla will reduce prices further in 2024, mitigating any earnings per share benefits of cost reductions. The Tesla narrative is complicated. 

Some analysts worry about margin pressure and where the electric vehicle maker fits in the matrix of the automotive sector. The other narrative weighs whether Tesla belongs in that discussion at all. Bullish researchers have consistently valued the business as a technology concern, not an automaker. 

Since the initial public offering in 2010 shares have risen by a staggering 23,308%. There is no debate about what camp is winning. Moreover, Tesla shares recorded an upside breakout on September 8 after an upgrade by Morgan Stanley researchers. 

Analyst Adam Jonas offered a price target of $400 per share based on his belief Tesla’s AI portfolio might be worth $500 billion in market capitalization. Pullbacks to test breakouts are common. Tesla bears should be cognizant that they may be backing the wrong researcher. 

The Tesla analyst drama should take the second stage this week, though. Bulls and bears are awaiting Wednesday’s Federal Open Market Committee policy statement. Expect the benchmark to drift higher toward the 50-day moving average ahead of the FOMC as bears grudgingly cover short positions. The NDX has a minor support at 15,139, the September seventh reaction low.

Double Trouble: Our NDX timing model turned bullish on Thursday. Members purchased on Friday the ProShares Ultra QQQ (QLD) at $64.70. 

Now set up to sell the entire position at $71.19, and set stop at $62.31.

Learn more about Jon Markman here...