Can the Market Give Us 3 Big Up-Days? | Trading NVDA, TSLA, SMH

The SMH ETF is just 1 out 16 for finishing higher after a 4%-plus day.

Technical Breakdown 

• NYSE Breadth: 84.6% upside volume

• NASDAQ Breadth: 81% upside volume

It’s been a while since we’ve had this many significant volume breadth days. Yesterday was significant because it was a back-to-back 80%-plus breadth day on the NYSE. It was also an 81% breadth day on the Nasdaq. 

I think the strength took most traders off-guard yesterday. 

The way we closed on Monday technically left the markets vulnerable to more downside — in other words, bulls weren’t out of the woods. The S&P 500 tried but failed to close above Friday’s high and active resistance from the declining 10-day moving average. 

On Tuesday, we had a gap-up into the 21-day moving average and the prior week’s high. 

For most traders, the odds in this scenario favor booking some or all profits and looking for a pullback. It was the prudent thing to do, even though holding through to the close would have paid the best in yesterday’s action. 

This is a game of probability and odds — it does not guarantee anything. But you simply place your bets in setups where the odds are in your favor. Yesterday’s action favored taking some exposure off in the opening 15 to 30 minutes. From yesterday’s game plan:

“You don’t have to be net short after the open — or sell at all for that matter — but I personally find it worth the opportunity to take some gains off the table when given a gift like this.”

We talked about the building buy-stops up above and clearly that was the case, as shorts have been forced to cover. 

S&P 500, Nasdaq

From a charting perspective, I don’t have much to add from the other posts this week. Bulls want to see the S&P hold last week’s high. If it can do that, upside resistance and the all-time high are in play. 

Those levels look like this:

SPY

• Hold last week’s high at $466.56

• Resistance is $470.50

• The all-time high is $473.54

S&P Futures 

• Last week’s high 4670

• Resistance is 4712 (that’s also today’s Globex high, FYI)

• The all-time high is 4740.50

Some may critique this look as “lazy,” but I don’t think so. I really just like to keep it simple and this is the simplest approach. 

Above last week’s high and the upside levels are on watch. Below last week’s high and we have to do some navigating. 

Specifically, I want to see the flat 21-day and rising 10-day moving averages hold as support. A break of these measures will force bulls to shift into a more cautious stance going into the end of the week. 

For the QQQ and Nasdaq, it’s a little different. 

Nasdaq Futures Daily | Click to Enlarge

The Nasdaq futures have struggled with the 16,450 area — and did so again in the Globex session. A move over this level not only gives the NQ a weekly-up rotation, but also puts the 16,750 highs in play. 

On the downside, we want to see it hold the 10-day and 21-day moving averages. That would be a mild pullback from Tuesday’s high, but still leave bulls in control. 

Thus far, the NQ is contained with an inside week, although there is plenty of time to go. 

QQQ Daily | Click to Enlarge

The approach to the QQQ is straightforward too. 

1. Don’t give up Tuesday’s low

2. Close above $401 resistance. 

The more time over the 10-day and 21-day moving averages, the better. Below Tuesday’s low and the gap becomes vulnerable, all the way down to $387.60.  

Individual Stocks — SMH odds of a Fade, TSLA, NVDA, Macy’s