Technology bulls retreated further on Thursday as professional money managers continued to trim positions in the Magnificent Seven tech stocks, states Jon Markman, editor of Strategic Advantage.
The Nasdaq 100 closed at 16,282, a decline of 0.6%. The weakness leaves the benchmark down 2.7% during the last four sessions, and very near the first support level at 16,167. For bulls, that is the good news.
Unfortunately, the bearish narrative is gaining resonance. Shares of Amazon.com (AMZN) and Alphabet (GOOGL) joined Apple (AAPL) on Thursday with noteworthy losses. The stocks lost 2.6%, 1.8%, and 1.3% respectively.
Bears say these shares are incredibly expensive given their stagnant growth and growing competition. For the record, this perspective misses the point of digital transformation. These businesses are foundational to that generational trend.
The data that has become so important to corporate productivity is sorted and stored on Amazon.com and Alphabet servers. Much of this digital information originates on Apple devices. Pessimists have always been wrong about digital transformation.
That said, traders should follow trends. It makes no economic sense to get in front of the current decline. I expect bulls to regroup over the next several sessions as bulls retreat to 16,167. If that level fails there is further support at 15,844, the rising 50-day moving average.
In the interim, the consolidation of 2023 gains continues. It’s noteworthy that Amazon.com shares were up 81% last year. A little giveback is not a terrible development.
Bulls will face stiff resistance at 16,475. There is no need to be a buyer until they can push back above that level on a closing basis.
