Hey traders!
The Nasdaq just hit a new high, and now we are seeing a reversal. The Nasdaq futures (/NQ) tagged 31,616.5 and is already back near 30,930, down about 1.5% on the session. SMH is weaker, down about 3.4% and trading near $604 after failing under the recent high. That is not a surprise. New highs are often followed by a pullback as momentum runs out and the market works off the extension. Yields and oil are the excuse today. The pattern is the same one we see after most pushes to a high: a fast move up, then a check of support.
I am not treating this as a change in trend. I am treating it as the normal digestion after the squeeze that carried the Nasdaq to that high. The work now is simple. Stop looking at what already ran, and start looking at who holds support while the index and semiconductors pull back. Those are the relative-strength names I want ready for the next leg.
The Pullback Zones on the Nasdaq Futures
On the daily chart, /NQ ran into the 161.8% extension near 31,542 and failed to hold the high at 31,616.5. The first support I care about is not the high itself. It is the cluster of rising moving averages underneath, the pullback zones marked on the chart.
The 21 EMA is sitting near 30,600. Below that, the next zones I am watching are around 30,300 and 30,000. Products like this tend to stick to key psychological values and round numbers, such as these, that align with critical moving averages. A normal pullback after a new high will land on one of these zones and hold, ideally the higher zones in a strong market. The market as a whole is strong, so I’m not looking for a major breakdown. I am looking for the price to check those averages and stabilize. If /NQ defends the 21 EMA and the zone just under 30,300, the uptrend is intact, and this is a reset, meaning a fantastic opportunity to buy. If it loses that band on a closing basis, I get more selective. The level tells me which it is.
The Pullback in the Semiconductors (SMH)
Semiconductors are leading the pullback, which is what I expect after they led the push. They typically pull back hard when they do, but they also rally hard once they shift higher. As of this writing, SMH is holding and bouncing beautifully at the 21 EMA on the daily chart, which is exactly what I want to see in a strong ticker on a pullback. That moving-average cluster is the pullback zone on this chart.
Check out the daily chart of SMH below:
The names that ran into this high did their job on the way up. Today, they are giving some back with SMH. Once the bounce hits one of these key support levels, I will know it’s time to add to the long side.
Relative Strength Trading
Trading relative strength is a lot of fun when your tickers are exploding to the upside, but not as much fun when you wake up and the market is getting hit to the downside. However, these downside moves in relative strength names have not lasted long. A 3% downward move in SMH used to be a lot, but in 2026, it is a normal day. And, the vast majority of the time, the ticker shifts quickly, typically due to a catalyst.
What I’m watching next
The catalyst that I see upcoming is earnings season! Taiwan Semiconductor (TSM) is reporting earnings on October 15th, alongside earnings from multiple other semiconductor companies. Make sure you take a look at https://optionsearnings.com/ to take a look at the top tickers reporting earnings in the options market!
