Technology bulls were stymied on Thursday, and they continued to fall back into the close on Friday. The Nasdaq 100 index finished at 14,955, a decline of 1.2%, states Jon Markman, editor of Strategic Advantage.
The loss erased nearly all the gains from the early part of the week. The benchmark closed only 0.2% higher during the five-session span.
It was the third consecutive weekly advance, however, bulls missed a golden opportunity to pummel bears into submission. A close for the benchmark above 15,330 would have been a knockout for bulls.
Bears would have surely conceded a rally to 15,619, the Sept first high. Some of the missed opportunity is due to rising geopolitical tensions. Almost of the headlines last week remind professional money managers that the world remains an exceptionally dangerous place.
Hot wars are currently in Ukraine and Gaza. And the cold war between the United States and China grows more bitter, exacerbated by rekindled conflict in the Middle East. It is a mess.
But we don’t get to choose the current conditions; we are only obligated to adapt to them.
Unfortunately for pros, many are still trailing the Nasdaq 100, the unmanaged benchmark. Although it may be more comfortable for them to slink away from stocks, they can’t afford to end 2023 with a portfolio below zero. This realization should keep declines shallow and short-lived.
There is critical support for the NDX at 14,978, then 14,558, the pivot level from the August and September lows.
Although it is also important to remain flexible, it is doubtful the latter level is in play. Bulls need a close beyond 15,330 to send bears into a panic.
Watch the shares of key firms such as Microsoft (MSFT) and Apple (AAPL) in the early part of the week. Both recorded breakouts above their respectively 20-day and 50-day moving averages in the first half of the week, only to retest those levels on Friday.
Retests of breakouts are common. The bottom line is bulls can regain momentum, yet that process needs to begin in the early part of the week.
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