Technology bulls on Tuesday actually bought good news, and the Nasdaq 100 spurted 0.5% higher to 14,410, states Jon Markman, editor of Strategic Advantage.

It has been a rough patch for bulls. Sentiment flipped to bearish and professional money managers have used every opportunity to lighten position sizing.

Even good news brought sellers, like the blowout earnings report last week from Meta Platforms (META). Bears started to win the battle of narratives, the idea that valuations are simply too high given the outlook for a 2024 corporate earnings recession.

This talking point is now embedded among pros. The response on Tuesday to a stronger financial report at Arista Networks (ANET) was a welcome respite for bulls. Arista is a major supplier of networking gear to Microsoft and Meta Platforms.

Executives at the latter committed last week to $35 billion in 2024 new capital expenditures. This astonishing figure provides a glimpse of the enormous opportunity ahead in artificial intelligence. The biggest companies in the world are spending lavishly to get ahead of AI projects. There will be no earnings recession for IT infrastructure providers.

Arista shares jumped Tuesday by 14% to a record high. The pockets of strength within the NDX make it difficult to totally buy into the bearish doom and gloom. Unlike the S&P 500, technology bulls have yet to cede critical support for the NDX at 13,956, the rising 200-day moving average.

There is resistance for the benchmark at 14,655, and 14,955, the falling 20-day and 50-day moving averages, respectively.

We plan to provide more rationale for a positive point of view for bulls as soon as Wednesday.

Nasdaq Timing Model: Our timing model is now neutral; however, we are looking for a violent rally for the NDX from support at 13,656. We plan to add new bullish positions soon.

Learn more about Jon Markman here...