Bulls limped into the weekend on Friday, bloodied by a weeklong attack by sellers. The Nasdaq 100 closed at 14,561, a decline of 1.5%, states Jon Markman, editor of Strategic Advantage.
The benchmark lost 2.9% on the week as bears jabbed away at the shares of key leadership firms and interest rates continued to rise. The weakness on Friday for Tesla (TSLA) shares is indicative of how quickly sentiment changed in favor of bears. Shares of the electric vehicle manufacturer in the middle of the month seemed destined to make a major run higher. Analysts at Morgan Stanley raised the firm’s price target, citing Tesla's leadership in artificial intelligence.
Investors even seemed unphased by weaker-than-expected quarterly production reports. Elon Musk, chief executive officer, said Wednesday that rising interest rates are clouding the outlook for auto sales. Shares plummeted, falling Friday below the 200-day moving average at $214.70. Musk’s message about interest rates has not been lost on professional money managers. Their investment models are turning bearish, and they no longer feel compelled to chase the NDX higher.
For many that is a welcome relief. They have never been comfortable this year with stocks. They were late to the rally in January, and they were reluctant buyers in July as the benchmark neared 40% 2023 gains. The benchmark Nasdaq 100 is still ahead 33% year-to-date, with dividends included. The question for the next two months will be if pros are again forced to buy the NDX. For the record, any economic data that shows the economy slowing could shift sentiment back in favor of bulls. Support for the benchmark is 14,443, the September low. Resistance is 15,030, the 20-day and 50-day moving averages.
Nasdaq Timing Model: Members bought the ProShares Ultra QQQ (QLD) at $61.49 on October sixth. The QLD is an exchange-traded fund that delivers 2x the daily performance of the Nasdaq 100 index. Place an order to sell the entire position at $69.50. Place a stop loss order at $56.40. The close on Friday was $57.79.