On Tuesday, we talked about a reversal chat pattern in the Nasdaq 100 (QQQ) that was created from the price clearing over the 50-day moving average. Although today began with price under the 50-DMA, QQQs turned around, closing over Tuesdays high. Hence, the reversal pattern has confirmed right by a key moving average.
Now, the 50-DMA is a support area. This is important to note when using major moving averages as references for support or resistance levels.
Looking forward, ideally QQQs should hold the 50-DMA at 320, although we would have a stop under Tuesday's low or under 311 to give it some room. Additionally, the strength we are seeing in the QQQs also bodes well for tech giants, several of whom also tested and held their 50-DMAs, such as Microsoft (MSFT).
In a market with so many opportunities coming from new tech and SPACs, large tech has a lot to compete with for investors' money. With that said, this is a great time for large companies to push into new trends. Several are trying to divest, like Apple (AAPL) exploring the EV space.
Our takeaway from the QQQs support level (and now rally) is that buyers show up at these key moving averages. We do not want to see NASDAQ fail, as that can drag everything with it. Nonetheless, QQQs may have held a key support level, but the leadership has clearly changed to energy, banks and transportation.
Speaking of transportation, Mish hosted Wednesday's episode of StockCharts TV's Your Daily Five with her top TEN charts for this week. Grab your pen and paper, as she's on a roll discussing transportation today IF an infrastructure plan is passed.
- S&P 500 (SPY): 394.17 high to clear
- Russell 2000 (IWM): 230 resistance. New support 215 area
- Dow (DIA): All time highs
- Nasdaq (QQQ): Needs to hold the 50-DMA at 319.57
- KRE (Regional Banks): All time highs
- SMH (Semiconductors): Next main support the 50-DMA at 231.62
- IYT (Transportation): 249.49 the 10-DMA
- IBB (Biotechnology): Watching to hold the 50-DMA at 160.53
- XRT (Retail): Needs to clear 81.46. Closed over 75.28 support
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
