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Funds Rotate Into Nasdaq, But Light Volume Is A Concern

|Includes:QQQ, VanEck Vectors Semiconductor ETF (SMH)

Led by solid gains in the Nasdaq 100 and Nasdaq Composite, stocks closed higher across the board yesterday (April 22). The Nasdaq Composite easily outperformed the S&P 500 on Monday, signaling that money is beginning to rotate out of the S&P 500 (and Dow) and into the Nasdaq. This is a positive sign for the bulls, but there is one main concern about this -- a lack of higher volume.

Over the past two sessions, the Nasdaq has climbed about 2.5% off last Thursday's low. However, volume declined in each of those past two sessions, which means the move was unconfirmed by institutional buying. The Nasdaq may need a bit more time to consolidate, as there is quite a bit of overhead resistance.

Looking at the daily chart of the Nasdaq 100 ETF ($QQQ) below, we see price action running in to resistance clustered around $69.00:

(click to enlarge)Click to enlarge

The five weeks of stalling action near $69, along with the 10 and 20-day moving averages, make for quite a bit of resistance. However, if $QQQ can power through this level without further consolidation, it would be a very bullish sign.

Market Vectors Semiconductor ETF ($SMH), an ETF we have been bullish on since the initial March 28 analysis on our trading blog, continues to chop around near the pivotal, intermediate-term indicator of its 50-day moving average, with support coming in around $34.50 last week.

If $SMH can set a higher swing low and close above Monday's high on a pick up in volume, then it may attract enough buying interest to break the short-term downtrend line and test the highs of the base:

(click to enlarge)Click to enlarge

In today's Wagner Daily newsletter, we are stalking $SMH for potential swing trade buy entry if it meets our technical criteria (looking to add to our existing position on strength). Subscribing members should note the details for $SMH in the "watchlist" section of today's report. Presently, all five of the open positions in our model trading portfolio (3 ETFs and 2 individual stocks) are showing unrealized gains.


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Stocks: SMH, QQQ