Nasdaq Hits Record as Semiconductor Strength Tests How Far Stocks Can Climb

Stocks are moving higher as key technical breakouts and semiconductor strength push the Nasdaq to a new record. The opportunity remains for further upside, but several rallies are stretched, Treasury yields remain elevated, and key confirmation levels are still unresolved.

In One Minute

The Nasdaq is at a new high, and the SPDR S&P 500 ETF Trust (SPY) gained 0.67% as buyers reclaimed an important declining trend line. Semiconductor strength is helping the advance, with Taiwan Semiconductor Manufacturing Company Limited (TSM) benefiting from discussions around specialized chips for the Terafab project. The biggest risk is chasing moves that have advanced too quickly before they establish dependable support. Watch the Nasdaq’s 28,000 to 28,200 resistance zone and whether SPY confirms the pattern that could open a path toward $800.92.

The Setup

The main relationship I’m watching is whether these breakouts can hold while the United States 10-Year Treasury yield (US10Y) remains elevated. Yields reached another high for the year before easing slightly, quickly reversing Friday’s decline after a pattern had pointed toward lower yields. The advance has been steep, so sideways trading or a healthier pullback remains possible.

Unrest in France adds uncertainty to Europe and keeps attention on the United States. The United States Dollar Index (DXY) also approached recent highs before pulling back. A stronger dollar supports purchasing power and can help ease inflation pressure, even as elevated yields remain part of the broader market picture.

What Changed

SPY’s recovery started with Thursday’s long lower wick near the previous record high of $760.40. That candle did not qualify as a traditional bottoming pattern, but the next two sessions delivered a strong upward response. Friday cleared the declining trend line, briefly tested beneath it, and recovered. Two successive daily closes above that line strengthen the breakout and turn former resistance into potential support, the first such confirmation since the daily close above it on the 21st.

There is also a possible inverse head and shoulders pattern, with the middle of three lows forming the deepest point. It needs a close above the neckline, the line connecting the rebounds between those lows, and that has not happened yet. Price pulled back before finishing above it, but confirmation would bring $800.92 into focus. Until then, I’m watching $765.42 and the former declining trend line for support.

The Nasdaq Composite Index (IXIC) moved far enough above its declining trend line to let that line become support. After an initial bounce and some sideways trading, the recovery accelerated into new records. The next resistance zone is 28,000 to 28,200 points, based on the longer term line connecting the November 2021 and December 2024 highs.

West Texas Intermediate Crude Oil (USOIL) fell 2.24%, with the latest four to five sessions moving sideways near the bottom of its parallel channel. Add the preceding five sessions, and that range resembles a larger bear flag, a pause that can lead to another decline. A separate inverse head and shoulders pattern remains relevant while oil holds above its declining neckline. That pattern points toward $116, although the immediate price action does not suggest a direct move there.

The next support is $86.90, where a bounce could retest the underside of the channel. Moving back inside it would open a recovery path toward $108 and potentially $116. Even an immediate end to the Middle East conflict would leave countries needing to replenish depleted strategic petroleum reserves. Gasoline price stabilization could take up to two years as those reserves are rebuilt, leaving room for oil prices to stay elevated longer despite the recent decline.

Natural Gas (NATURALGAS) extended its rebound after Thursday’s single close beneath support failed to attract further selling. That resembles the September 10 recovery, when price quickly moved back above the support trend line. The next test is $3.23, with declining resistance around $3.23 to $3.24 in the following session.

The earlier breakout above that barrier had a strong initial extension but lacked subsequent daily confirmation. Price returned to the area where the previous breakout had been established and started bouncing again. This time, I want to see a move above resistance followed by sessions that hold it.

Gold (GOLD) was essentially flat and remains inside a bear flag, but a possible inverse head and shoulders pattern is also developing. The left shoulder and head are visible, while the right shoulder is still forming. That right shoulder must stay above the low of the head to preserve the bullish setup.

Buyers need to reclaim the nearby trend lines and then break the declining neckline. That would open a path into the upper half of the parallel channel and potentially toward the previous highs. Support sits just below $4,000, around the bottom of the head, and a break beneath that low would invalidate the developing reversal. I remain constructive longer term, but near term I would prefer a further pullback and a better entry price.

Silver (SILVER) has a similar possible reversal, although its right shoulder is more stretched out and its overall structure is weaker than gold’s. A separate head and shoulders pattern has already broken downward, so the established bearish signal is competing with a developing bullish one. Nearby resistance is $67.59, support is $58.92 at the channel midpoint, and the bearish measured target is in the low $55 range.

A decline beneath the head of the developing bullish pattern would invalidate that reversal. Lower support could offer an opportunity to add silver, but a recovery would still need to rebuild the formation and clear its neckline. I’m watching whether buyers can defend those lower areas before treating the upside pattern as actionable.

The VanEck Semiconductor ETF (SMH) has spent two sessions consolidating after its advance, continuing the pattern of pauses that helped create a staircase higher. The Fibonacci retracements of the decline from the June 22 high to the July 29 low remain important: $607.58 at the 0.618 level and $635.84 at the 0.786 resistance area. SMH is becoming extended, so more sideways trading would help establish a stronger base before another test of the record highs around $670. A direct push there without consolidation could struggle to hold.

TSM advanced as Elon Musk announced discussions about purchasing its chips in Texas or taking a partnering role to influence specialized chips for Terafab, involving SpaceX and Tesla, Inc. (TSLA). Its inverse head and shoulders target aligns with the upper boundary of the parallel channel at $530.49. The daily Relative Strength Index, or RSI, is 75.65, showing that momentum has become stretched.

Another upward session is possible, but I would welcome consolidation before the next leg higher. The previous record at $479 and the channel midpoint at $471 define an important area where price could settle. A clean bull flag, a controlled pause after the advance, would support another move toward $530.49.

Western Digital Corporation (WDC) sold off last week after a major competitor announced plans to double hard disk drive production. Price fell below $400 and briefly broke its longer-term rising trend line. Monday’s gap higher reclaimed that line, but declining resistance has capped rally attempts since July. Buyers have defended $400, while the narrowing space between rising support and falling resistance makes a decisive move increasingly important.

I lean toward an upside breakout, which would bring $550.63 into focus, but price still needs to confirm it. The rising support line is at $427.41 in the next session. That line has already failed once, so another break would weaken the recovery. The sideways to declining range since summer provides the backdrop for a potentially substantial move once price clears it.

General Mills, Inc. (GIS) is trading at $31.68, close to the $30.26 downside target of its large weekly head and shoulders pattern identified in 2024. After the original breakdown, price retested the neckline and even recorded one weekly close above it, but never established sustained confirmation. The decline resumed through several temporary rebounds, including a substantial bounce around June 1 toward $41 to $42. Those gains have now been surrendered.

Support overlaps around $30.90 at the 0.886 Fibonacci retracement, $30.70 at historical pivots and consolidation, and $30.26 at the pattern target. Together, those references create a zone roughly $0.70 wide beginning around $30.90. The earlier bounce reduces the appeal of treating this as untouched support, but the latest nearly vertical decline leaves room for a technical recovery toward $35.54. I want to see that support hold rather than assume the decline is finished because the target is close.

Space Exploration Technologies Corp. (SPCX), commonly known as SpaceX, broke higher after a possible bearish head and shoulders pattern failed to develop further. The September 28 decline briefly separated price from its rising trend line, but sellers could not extend the move. Price repeatedly tested the line before breaking upward, followed by two substantial advances that changed the chart’s direction.

An inverse head and shoulders pattern now points toward $217, although limited price history makes comparisons with older trading levels difficult. The daily RSI is 68.81, and price could reach the 0.618 Fibonacci level at $179.49 before pulling back. A controlled return to the declining dotted neckline would test whether former resistance has become support.

Pullbacks remain potentially constructive while price holds above that neckline. Lower support sits at $131.43 and $125.19. I’m looking for the breakout, a return to the neckline, and a bounce that confirms buyers are defending the structure and keeps $217 relevant.

Digital Assets and Crypto

Bitcoin (BTCUSD) declined 0.85% and is developing a possible cup and handle near $86,500, combining a rounded recovery with a smaller consolidation. Continued sideways trading there would give the advance time to settle and could prepare for another upward move. The broader chart still has an unresolved bearish head and shoulders pattern, with its rising neckline acting as the main barrier and $37,000 remaining the measured downside target.

The important breakout level is $89,543. I want to see Bitcoin move above it, extend the advance, and hold before treating the larger bearish structure as neutralized. A later return to the neckline could then offer an entry if buyers defend it as support. The weekly chart also marks $53,000 as a separate support reference below the current range.

For now, the smaller bullish formation and the larger bearish structure remain in competition. The Clarity Act could become a catalyst, with passage possible in early 2027 rather than assured. November’s midterm elections could contribute to choppy trading before investors and companies have a clearer view of congressional direction. Policy may influence sentiment, but price still needs to confirm the breakout.

Why It Matters

These moves matter because a breakout becomes more useful when buyers can defend the level they just reclaimed. SPY has improved its structure, while the Nasdaq, SMH, and TSM are approaching resistance or becoming stretched. WDC and SpaceX also need their reclaimed trend lines and breakout structures to hold.

The same discipline applies beyond stocks. Gold and silver have competing patterns, oil’s short-term weakness sits alongside reserve rebuilding needs, and natural gas needs follow-through above resistance. Bitcoin also needs sustained confirmation before its smaller bullish setup can overcome the larger bearish one.

Key Levels

Bull Case

The bullish stock setup depends on SPY confirming its neckline breakout and the Nasdaq holding its improved structure. Consolidation in SMH and TSM would help their advances build staying power, while WDC needs to clear declining resistance. SpaceX needs to defend its neckline, and General Mills needs buyers to hold the overlapping support zone.

For commodities, oil needs to hold its bullish neckline and recover inside the channel, while natural gas needs sustained closes above $3.23 to $3.24. Gold and silver need their developing right shoulders to hold above their heads and price to clear the bullish necklines. Bitcoin needs an extended, sustained move above $89,543 followed by a successful support test.

Bear Case

The stock risk is that stretched advances reach resistance before establishing stronger bases. That could make SMH’s move toward $670 less durable, while another WDC break beneath its rising support line would weaken its recovery. SPY’s $800.92 target also remains unconfirmed, and General Mills needs to hold its support zone before a rebound becomes more convincing.

Gold and silver would lose their developing bullish patterns if price fell beneath their heads, with silver’s low $55 bearish target still relevant. Oil remains inside a bear flag, and natural gas has already shown how an unconfirmed breakout can reverse. Bitcoin’s larger bearish structure remains unresolved below sustained neckline confirmation, leaving $53,000 support and the $37,000 pattern target in the broader picture.

What to Watch Next

In the next session, I’m watching SPY’s neckline, natural gas at $3.23 to $3.24, and WDC’s rising support at $427.41. The Nasdaq’s 28,000 to 28,200 resistance zone and whether SMH and TSM pause constructively are also important. For SpaceX, a controlled neckline retest would help show whether the breakout has staying power.

Beyond stocks, watch oil’s $86.90 support and whether gold and silver preserve their developing reversal structures. Bitcoin’s immediate test is a sustained move above $89,543 after consolidation near $86,500. November’s elections and possible Clarity Act progress in early 2027 remain the policy catalysts to monitor.

Bottom Line

The main question is whether reclaimed resistance becomes dependable support, because that determines whether the stock rally can continue with staying power. Metals, energy, and Bitcoin also need confirmation before their more optimistic patterns become actionable. Let price hold the important levels, allow stretched moves to settle, and keep entry prices disciplined.