Technology bulls on Thursday brushed off weakness from the previous session and punched their way to a solid rally. The Nasdaq 100 closed at 17,345, a gain of 1.2%, states Jon Markman, editor of Strategic Advantage.
The rally for the NDX is an important win for bulls. The technology-heavy index came under pressure on Wednesday after Federal Reserve chairman Powell said he did not expect a rate cut in March at the next Federal Open Market Committee meeting.
Some bears embraced the idea the Fed is committed to higher for longer, an inflation-fighting strategy that bears hope will ruin the US economy. Ruin is an everlasting talking point for bears. They say that the Fed will make a policy error that leads to a hard landing for the economy, a corporate earnings recession.
This has been a hard sell, especially in the technology sector. Alphabet (GOOGL) and Microsoft (MSFT) reported on Tuesday evening that quarterly sales and profits exceeded forecasts. And after the close on Thursday executives at Amazon.com (AMZN) and Meta Platforms (META) made a similar declaration.
Amazon Web Services, the cloud computing division at the online retailer, had quarterly revenues of $24.2 billion. This business is on a $100 billion annual run rate. And sales at the fledgling advertising division swelled to $14.2 billion. Five years ago, both businesses were a relatively small sliver of overall revenues at the Amazon.com store.
Meta’s numbers were even more impressive. The social media platform had $40.1 billion in sales during the quarter, nearly $1 billion ahead of forecasts. Revenues jumped by 25% year-over-year even as expenses declined by 8% over the same time frame. Shares rose in after-hours trade by 4% and 12% respectively. It’s noteworthy that executives at both Amazon.com and Meta continue to build impressive new businesses by leveraging the scale of their respective digital platforms.
Shares of Apple (AAPL) moved lower Thursday evening after the iPhone maker reported continued weakness in Chinese sales. The Bulls have a puncher’s chance on Friday to push the Bears to the limit. The Amazon.com and Meta news will reinvigorate investors in big tech.
Bears could concede a rally for the NDX to 17,665, the recent high. I’m doubtful that they will be able to regroup there. The next logical target would then be 18,296. Key support for the benchmark is 17,123, the 20-day moving average.
Double Trouble: Our timing model is now bullish. Members added the ProShares Ultra QQQ (QLD) on January 17 at $73.90.
The QLD closed on Thursday at $80.06, up 8.3% from the entry level.
The new stop-loss order is at $73.15. The target for this position is $88.30.
