Nvidia-Heavy ETF Seeks Path to All-Time High Price

The honeymoon is over.

Well, at least for tech and small caps. The post-election pop has retraced to support levels, and it is time to keep a close eye on the semiconductors. The good news is that the S&P 500 has maintained its rally without the previous leaders, so we can conclude that we see rotation in the index.

The VanEck Vector Semiconductor ETF SMH has hit a ceiling. The Nvidia NVDA and Taiwan Semiconductor Manufacturing TSM heavy ETF has struggled to break above $262.50. TSM and, to some extent, Broadcom AVGO have been the laggards across the past few trading sessions. NVDA, king of the chips, has maintained a closing price near highs.

While SMH has resistance dating back to July around the $262.50 level, it has enjoyed a series of higher lows, creating a very large ascending triangle pattern. A close above $262.50 would be bullish and open the way back to all-time highs $20 higher from the breakout level.

Unfortunately for bulls, SMH sits on the support of the rising lows trendline. A close below $247.50 may draw the wrong kind of attention from the momentum trading crowd. SMH bulls may find light support around $242.50, but with a broken trendline combined with an ETF trading below both the 10-day and 21-day exponential moving averages (EMAs), support may be hard to come by.

While $200 could be argued as the ultimate downside support level, I have $220 to $225 as the downside target should we fail to find buyers today or tomorrow.

Semiconductors isn’t the only ETF struggling. Gold and silver both broke below support levels after the election. With both ETFs in no man’s land, charts aren’t much help without a few more days of trading, so I’ll wait until next week to examine gold.

At the time of publication, Byrne had no positions in any securities mentioned.