By the end of Tuesday, the S&P 500 (SPY) and the Nasdaq 100 (QQQ) were able to rally off support from lows found in late January. If they can hold their current prices, we can next watch for each to run back towards their range highs near $370 for the QQQ and $458 in the SPY. However, with the market's current sideways trend and a potential break lower, where should we watch for a buy signal?

With that said, if we are looking for follow-through on Wednesday to the upside, watch for the QQQ and SPY to clear back over Tuesday's highs by the end of the day; $435.50 for the SPY and $344.04 for QQQ. On the other hand, a break under Tuesday's low of the day, at $425.86 in the SPY and $334.35 in the QQQ, means we could be in for a break under major support.

While we are in a pivotal area, this is a great trading spot in which we have clear risk to the downside.

One last thing to note is our special risk on/off indicator—High Yield Corporate Debt (JNK). To add another layer of confirmation to the upside, watch for JNK to clear its 10-Day moving average at $103.55. If JNK is unable to clear resistance from the 10-DMA, this could be a warning that the market is not ready to rally.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

On the latest edition of StockCharts TV's Mish's Market Minute, Mish shows you where to park your money in this rangebound market. With ups and downs in current events, she still thinks there are plenty of opportunities for investing; you'll just need to get creative!

ETF Summary

• S&P 500 (SPY): Needs to clear 435.50.
• Russell 2000 (IWM): 195 next support.
• Dow (DIA): 333 low needs to hold.
• Nasdaq (QQQ): 334 support.
• KRE (Regional Banks): 72.93 the 50-DMA to hold.
• SMH (Semiconductors): 261 to hold.
• IYT (Transportation): 254 support area.
• IBB (Biotechnology): 122.50 low to hold.
• XRT (Retail): Broke under main support at 75.62.

Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education