Technology bears got punched in the mouth as the Nasdaq 100 blasted through an important resistance level, states Jon Markman, editor of Strategic Advantage.
The benchmark closed at 16,793, a gain of 0.7%. The advance brings the tally this week to 3%. More importantly, bulls have punched through the resistance point at 16,750, surpassing the highs set in January 2020. Fear is playing a big part in the move higher. Professionals spent all of 2023 convinced that the economy would weaken and that corporate spending constraints would hamper profitability for big tech companies. However, even as the largest investment research firms downgraded tech shares in January, prices stabilized.
Later in the month, the ChatGPT mania ensued. The Open AI chatbot changed the calculus for investors. Every company remotely associated with the groundbreaking software gotta share a price bump. Investors even speculated that Google search was doomed. It was not. And four months later Nvidia (NVDA) reported blowout earnings on jaw-dropping sales of AI hardware. The AI-inspired tech rally hit full stride, and bulls never looked back. For many bears it must feel like déjà vu. Nvidia shares got a big upgrade last week at Bank of America, and executives were all smiles Monday as new products were rolled out during the Consumer Electronics Show.
Further, there has been persistent chatter that Microsoft (MSFT) is finding good demand for its CoPilot, an AI bot that augments the Office productivity suite. Pros are anxious. They are buying. Nvidia shares are up 10% in 2024, the best performance among all big tech issues. Microsoft is ahead by 4%. Bears are justifiably dazed. A good smack in the mouth can have that effect. Bulls could deliver the knockout blow Thursday morning following a tame consumer price index report. This is the kind of market that could lead to a parabolic rally, a buying frenzy. A rally to 17,000 is in play for the rest of this week. Critical support is now 16,530.
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The target is $88.30
