Nasdaq 2300 or Bust -- or 2300, Then Bust

Major equity averages are entering a period of high volatility, and recent trading ranges are more likely to break to the downside, even if modestly higher levels are achieved first. Since my thesis has been that the Nasdaq Composite provides leadership up or down, my market call is simple: "Nasdaq 2300 or bust" or "Nasdaq 2300, then bust."

My sector work, seen on the chart below, shows that technology remains the cheapest sector at 16.0% undervalued. Consumer durables are in second place at 6.6% undervalued. Energy is 6.5% overvalued vs. 17.2% overvalued last month. The fundamental screens thus agree with my theme that the tech-heavy Nasdaq must lead, or the stock market is a bust.

Taking this tech-must-lead theme one level deeper, technology leadership needs to be confirmed by the Philadelphia Semiconductor Sector Index (SOX). The SOX's 200-week simple moving average is important support at 421.08, and downside momentum could accelerate on a weekly close below it. A weekly close above my new monthly pivot at 438.20 would be a stabilizer and would signal renewed technology leadership. The October high of 483.20 was a failed test of quarterly resistance at 487.90. ...