Today proved that it’s unwise to count the technology-heavy NASDAQ out even in a world of rising interest rates. Traders caught short got their faces handed to them.

And this isn’t necessarily an isolated bounce, either. As we move into earnings season, tech companies have an opportunity to convince Wall Street that they still have the right stuff to grow faster than inflation and justify their valuations.

We’ll learn a lot more in the next few weeks. For now, if the lows of the last few days hold, a breakout to the upside is looking a lot more likely than another nightmare decline.

It’s going to take a convincing drop below 13,300 to break support on the NASDAQ. That could easily happen . . . support is only a little stronger than “theoretical” and it’s only a 2% bad day away.

But the last few days have demonstrated that even theoretical support counts for something in a world where the NASDAQ is still fighting its way out of the bear market zone and remains 16% down from its peak.

We’ve seen that these stocks can survive in a relatively normal rate environment. That shouldn’t be news to veteran investors who remember how well names like AAPL and AMZN did before the pandemic.

And while support isn’t firm below the NASDAQ right now, resistance is only a short hop away. If these stocks can rally even 1.4%, the top of the trading band opens up to give the bulls a lot more room.

Earnings can open up that ceiling, especially if the banks keep foundering. Remember, money always needs to go somewhere. Bad news for banks tends to crowd capital back to Silicon Valley.

I wouldn’t want to be shorting technology right now unless an extremely short-term opportunity opens up. We’re talking a timeline measured in days if not hours.

On the other hand, I’m not going extremely long either. Even if the NASDAQ gets its groove back for this season, there’s a harder ceiling just 8% up from here.

A return to record-breaking rally conditions is unlikely. And that’s going to keep these stocks collectively moving sideways until something happens to change the mood.

I’m not looking to earnings. Technology remains an engine of huge disruption and innovation . . . but the biggest tech stocks are also the most mature. They’ve slowed down.

Look at the NASDAQ, dominated by trillion-dollar giants. Small and more sincerely dynamic companies have to really fight to get any daylight there at all.

They’ll pay off in years to come. But you need to take a relatively concentrated, high-conviction position in them to exploit their success . . . while ignoring the giants as best you can.

The NASDAQ doesn’t deserve to drift into deep bear market territory just because the Fed is getting aggressive. That’s not a scenario that helps any corner of Wall Street thrive.

However, there just isn’t enough growth in the NASDAQ to justify premium pricing. I did the math. At best, these companies are on track to boost their earnings 10% in the coming year.

That’s pretty good. Ordinarily it’s enough to support decent upside in the stocks at relatively “ordinary” valuations.

Maybe it’s worth a 15-18X multiple. That’s a problem when the NASDAQ as a whole is still priced at roughly 27X forward earnings.

Three months ago, the math was much worse. Now it’s a little better . . . but still not great.

These stocks just won’t be a screaming buy again until one of two things happen. Either growth spikes need to come in triple or quadruple what Wall Street currently anticipates or the stocks need to crash at least 30% from here.

Meanwhile, you can get similar growth from the S&P 500 for roughly 19X earnings. Maybe those stocks skew slower in the long run, but they’re still bouncing back from the pandemic in the here and now.

A lot is riding on this earnings season. I don’t think it will be a fantastic one for Big Tech but it’s unlikely to be a complete rout either.

Both scenarios open up opportunities. And in the meantime, short-term traders can simply follow stuck stocks across established channels.

Sideways markets can be fun too. You simply need to be honest about where the likely outcomes are . . .and pick the sweet spots accordingly.

That’s just the kind of mood Wall Street is in these days. Bad news is better than complete uncertainty . . . every data point we get helps to draw a line around the worst that can realistically happen, versus the worst scenarios we can imagine.

Wall Street has gotten used to imagining apocalyptic scenarios. The pandemic fractured a lot of risk tolerances, leaving investors exposed to the gnawing dread that it only takes one more shock to destroy the global economy as we know it.

Normally the end of the world is not a possibility we need to price into what we’ll pay for various assets. From that point of view, our sense of risk is relative (a shifting mix of good and bad) and not absolute.

It takes time to recover that realistic and mature view of the investment future being somewhere in between perfection and paranoia, Goldilocks and gloom.

If you’re already there, congratulations. You know the Wall Street glass is never 100% empty or 100% full, but somewhere on the continuum.

A lot of investors are not in that place. Good mental habits have eroded and the market needs to rebuild its sense of how much risk is survivable.

That’s why we see a surge of relief when the news is bad. In one respect, it’s valuable to be able to quantify how bad the current economic environment is.

The inflation numbers could have been worse. In a market trained to dread any inflation data release, the worst threat is not knowing how bad the numbers were going to be.

Now that we know, we can price 8% inflation into our overall investment landscape. It could have been 10% or something even scarier, but 8% is at least a known quantity now.

And the world hasn’t ended even with prices up 8% from last year. Inflation is a trailing indicator, looking backward.

We know now that we can survive a year of 8% inflation because we’ve all done it. It wasn’t fun, but it wasn’t the end of the world either.

Corporate leadership continues to ride the wave. Profit margins aren’t collapsing. Neither are sales.

That means shareholders are in little danger. Consumers are the ones feeling the pain . . . but owning stock is a way to blunt the blow at least a little.

Of course if earnings disappoint, shareholders will feel the pain as well. However, today tells me that unless the quarterly numbers are apocalyptic, Wall Street will probably breathe at least a little easier.

One way or another, we’re going to find out what every publicly traded company thinks about the present economic environment and the future. Question marks will be resolved.

Not every answer will make Goldilocks investors happy. But at least the rest of us will have answers. We’ll know which companies are doing well and which ones are struggling.

It’s no secret what to do with that knowledge. Underweight weakness. Buy and hold strength.

And these are relative terms as well. Every company is feeling at least a little inflationary drag. Very, very few are loving this environment.

But some are doing better than others. Those are the ones we buy. It’s that simple.