Technology bulls stepped back Monday as the Nasdaq 100 slipped to 15,483, a loss of 0.3%, states Jon Markman, editor of Strategic Advantage.

The modest decline could have been much worse. The benchmark was down almost 1% early Monday after traders digested a downgrade of the United States by Moody’s Investment Services, a major debt rating agency. 

Research from MIS is sought after by institutional investors to determine the creditworthiness of various government and corporate debt offerings. The downgrade of the United States from stable to negative underlines concerns raised in August by credit researchers at Fitch and Standard Poor’s. 

Analysts at all three firms are worried the United States is creating and carrying too much debt. And more importantly, that political polarization makes a solution unlikely. Both points are certainly valid. This sentiment in August led bond investors to push the yield for the 10-year Treasury note from 4.1% all the way to 5% only three months later. 

The uptick in interest rates hasn’t had much of an impact on the NDX, though. The benchmark is essentially unchanged at 15,500. And the shares of big technology companies like Microsoft (MSFT), Broadcom (BRCM), and ServiceNow (NOW) have all moved to fresh record highs. 

Bears often argue that technology companies are most impacted by rising rates because growth stocks are long-duration assets, meaning their future value is implicit in the current share price. This is a great theory that does not really bear the test of scrutiny. 

Big tech stocks rise and fall based on free cash flow, longer-term tailwinds, and fear of missing out. The latter is a big part of the rally from the October low. Professional money managers chasing performance now should strike fear in the hearts of bears. 

This is why every decline is shallow, a situation that should persist until the end of the year. There is excellent support for the benchmark at 14,955, the 20-day and 50-day moving average. There is no important resistance until 15,932, the July high.

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