Technology bulls continued to flee on Thursday amid more fallout from the federal open market committee meeting, states Jon Markman, editor of Strategic Advantage.

The Nasdaq 100 tumbled to 14,694, a decline of 1.8%. It was the third consecutive big decline for the benchmark. The bulls are clearly in trouble. Professional money managers are liquidating tech positions in anticipation of higher interest rates. This knee-jerk selling is predictable. Pros have models that tell them technology shares are most vulnerable when interest rates are rising. 

The theory is based on the cost of capital and future cash flows. Debating the efficacy of this strategy is largely irrelevant. The mega-capitalization technology companies that have come to dominate the NDX are flush. Apple (AAPL), Alphabet (GOOGL), Meta Platforms (META), and other big tech firms are sitting on mountains for cash. 

Chief financial officers in big tech are not especially reliant on the capital markets for debt financing. This reality will not stop bears from telling the story about squeezed profitability, though. And that is the point. Big stock market moves are about rapid shifts in narratives. The bears are winning, at least for the moment. 

I wrote Wednesday evening that bulls were likely to concede a decline for the NDX to at least 14,458, the August low. That level is in play for Friday. It would be normal for bulls to regroup there and mount a counteroffensive rally.

If this decline happened at the beginning of the week, I would be optimistic about a reflexive move higher, however, Fridays are tough. Traders are reluctant to take a lot of inventory over the weekend. 

If the 14,558 level fails, the next important support level for the NDX is 13,466, the rising 200-day moving average.

Double Trouble: Our NDX timing model flipped on Wednesday to bearish. I am looking to sell the first rally back toward resistance. I will send an intraday trading alert when appropriate.

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