We believe that last Monday's low was the bottom of the recent pullback and that the markets will charge higher in the coming weeks. Even though the NASDAQ 100 is right underneath 2007 highs, our mid-term system is far from being overbought. We would need a string of strong closes from here to trigger a sell signal. The NASDAQ 100 continues to lead and the Semiconductor Index continues to lag behind. With the major market indices likely pushing higher this week, it is possible that the bottom is also in for SMH - the Semiconductor ETF.

Tonight we are showing the NASDAQ 100, as opposed to its tracking ETF - QQQQ. You can see from the first chart below that the index is right above its recent rectangle pattern, but has yet to break above resistance. Even though the price level suggests it has broken resistance, as there was not a strong push higher we do not consider the recent move a breakout. When a strong push above highs occurs we will know that a breakout has happened. With the recent breakout being in the 2050 area, we feel the index is headed to 2350. The distance of the recent move was 150 (2200-2050) and 150+2200 is 2350. This is a rough estimate and it suggests a move just under 7% before a pullback begins.

So far SMH has underperformed this buy signal. Recent support was in the 33.40 area and more significant support lies at 33. If SMH does break the recent low and pushes to 33, we would likely have a deeper fall before the uptrend resumes. This is why it is extremely important for the ETF to push to at least 35 before even a short-term pullback begins. By moving to 35 there is less of a chance that a small fall will break the 33.00-33.40 support level. If the market continues higher this week (and we believe it will) SMH should be able to push to 35, before a move to 36.

IWM has clearly moved above both its 50 and 200 day moving averages. A push to 83 would confirm the recent upmove and a pullback here could damage the recent bullish structure.

We believe that last Monday morning was the low of the recent pullback and that prices will be pushing higher in the weeks ahead.