Here's the Setup

Apple, as well as NVIDIA and the semiconductors at-large, is leading a tech relief rally so far this morning. We have a quintessential backloaded week of news and events, what with the CPI Thursday morning, then PPI on Friday alongside a plethora of large cap bank earnings to kick off a new season of reporting--Note that the likes of JPM have been absolutely screaming higher into earnings, likely pricing in a coming good print (but what then?). 

As I write this, the S&P 500 Index is back to the 4720-4725 area, where it struggled most of last week as resistance. Rates are dipping back below 4.0% slightly on the 10-year, giving bulls hope that rates will only go lower from here for the elusive soft landing view to materialize. 

That said, I strongly suspect this relief move in tech is setting up as a good short entry into the more classically weak seasonal period coming up after MLK Day, which is this coming Monday and a market closing holiday. The SMH ETF for the semis is back up to its 20-day simple moving average now, where it functioned as support for months now before recently breaching it. Support converting into resistance would be a basic tenet of bearish technical analysis, which I clearly have on my radar for a potential play into short chips. 

On a more bullish note, also note another morning dip-buy in natural gas. The UNG ETF gapped down hard again this morning, but buyers are defending $5.50 again, as seen on the daily chart, below. Any change in character for natty, after being a prolonged laggard, ought not be overlooked.