The Delta variant scare didn’t last long on Wall Street. After a major selloff due to rising COVID-Delta numbers, algorithms kicked buying into high gear, taking the indexes to new highs to start off this week’s trading.
There is an old-saying on the floor of stock-houses, new highs are usually followed by higher, new highs.
As you can see on the NASDAQ chart below, the last time the tech-heavy index V-ed higher and through to a new high; it promptly rallied another 800-points. Monday’s move also put the NASDAQ on the verge of a possible technical buy signal called a bullish MACD crossover.
Without getting into the weeds and jargon, there is a zero-line that chart watchers observe for MACD moves. Typically, crossovers that occur above the zero line are more reliable, but less powerful, than those that happen under the zero-line.
The NASDAQ should continue to move north. How much higher is tough to tell as it is closing in on the upper boundary of its relative strength range. The best scenario would be a slow and steady advance versus a thrust. If traders take the index higher in a rush, we’ll be right back where we were a few weeks ago with overbought conditions. Hitting the upper guardrail will put a cap on the rally.
Index investors might consider an Exchange-Traded Fund (ETF) like Invesco QQQ Trust (QQQ) in the immediate future. Remember to be cognizant that a sudden burst higher would likely lead to some short-term profit taking. Whereas, boring, yet consistent small moves up could lead to a more profitable move. Think tortoise and the hare.
By a slim margin, last week’s top three performing positions belonged to Metals & Mining, Pharma, and Homebuilders. After that, it was all technology. First Trust NASDAQ Cybersecurity ETF (CIBR) has the most bullish technical score off all sectors at the moment. However, it might be over-extended and due for some profit taking. A dip to $48 could be a decent spot to buy.
ETFMG Prime Mobile Payments ETF (IPAY) might be our favorite of the top performing tech ETFs. It’s been stuck in a trading range from $65 to $73 for the majority of 2021. IPAY recently pivoted higher at $68 and is banging its head on resistance at $72.
Some bullish indicators suggest IPAY could work its way past $72. If so, then its next challenge will be to break through its 52-week high of $73.38. The ETF could be positioned for a nice advance should it conquer both.
Fidelity National Information Services, Inc. (FIS) is our favorite chart of IPAY’s top holdings. Much like the IPAY ETF, Fidelity National Information Services has been stuck in a trading channel for the better part of the year. It’s struggled to move beyond $150 and has found a ton of buyers at $140.
Our models show building momentum, which suggests Wall Street could be ready to push the Information Technology Services’ company’s price beyond the $150 ceiling. If that’s the correct call, then FIS could possibly be in for a solid rally.