If Bears hoped for a reprieve on Tuesday from their 2023 misery, they didn’t get it. Bulls continued to pummel their weakened defenses. The Nasdaq 100 closed at 16,354, a gain of 0.8%, states Jon Markman, editor of Strategic Advantage.

Everything is deteriorating for bears. For most of 2023, they were able to argue that the rally was all smoke and mirrors, the work of seven magnificent big capitalization firms. 

Shares of Meta Platforms (META), Amazon.com (AMZN), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Tesla (TSLA), and Nvidia (NVDA) have been big winners this year, and they do carry outsized weighting in the NDX. Their gains made the strength of tech seem more impressive, or so bears asserted. 

However, the state of the rally now is changing. It is broadening as shares of more firms assume leadership. These lesser caps like Broadcom (AVGO), Advanced Micro Devices (AMD), and Cadence Design Systems (CDNS) were featured gainers on Tuesday, rallying 4.2%, 2.3%, and 2% respectively.

I have written at length this year about digital transformation and the role these companies are playing in the build-out of key infrastructure. Surging tech capital expenditures are one of the tailwinds bears ignore because it doesn’t fit their narrative about the sagging economy. 

Bears would rather talk about new vehicles sitting on car dealership lots or rising levels of consumer debt. It’s easy to point to these metrics to justify bearish views. Unfortunately for bears, shares of companies in those sectors are underrepresented in the large indexes.

The businesses are simply too small. It’s a math problem their Excel spreadsheets keep missing. There is a chance that poor liquidity in late December, and anxious professional money managers chasing performance in the near term could push the NDX much higher.

Bulls’ path to the October 2022 record high at 16,765 is now unimpeded. Bears should prepare for more suffering.

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