Tech Rallies in Face of Spiking Yields -- Trading the Dip

AVGO, the SMH, QCOM, CSCO and others jumped out yesterday.

Technical Breakdown 

• NYSE Breadth: 70.75% upside volume

• NASDAQ Breadth: 76.4% upside volume 

Monday was a bit of an odd day — with a surge in rates and strong upside volume in the NYSE and NASDAQ. 

The Nasdaq churned out a 76% upside volume day, which is damn impressive considering the move in rates. So far bonds are under a bit more pressure in the pre-market (thus rates would be up). 

Let’s see if we get a fade in rates or a continuation. If it’s the latter, I will keep my eye on the Nasdaq and ARKK as it’s hard to imagine they can rally notably with that type of headwind. 

On the flip side, if rates open higher and fade throughout the day, then that could give tech stocks a nice tailwind to work with. 

Game Plan

They bought the dip a hair ahead of the level I was looking for in the SPY yesterday, which then went daily-up over Friday’s high. 

I want to see that momentum continue and for the SPY to hit new highs. Apple hit new highs on Monday, as well as a $3 trillion valuation. Can we get a bit more “oomph” in the market from here?

S&P 500 — ES Futures

S&P futures Daily

Whether you look at the futures, the SPY or the SPX index, it’s all similar: The index undercut Friday’s low, gave us a near-test of the 10-day and the prior breakout area, then reversed higher and went daily up. 

As you can see, the ES is now contending the 4800 level and gave a quick Globex pop up to 4807.50. 

From here, let’s see how the ES handles a rally back up to the 4800 level. Above that, we need to see if it can get above and stay above the Globex high.

 Otherwise, the 4780 to 4785 area will be on watch. 

QQQ