Stocks closed a positive week on the bullish note last Friday, as the major indices continued building on the recent gains. Although the Dow Jones Industrial Average was unchanged for the day, the tech-heavy Nasdaq Composite climbed 0.6%. The benchmark S&P 500 Index rose 0.3%. Both the S&P and Dow scored new ALL-TIME closing highs, while the Nasdaq closed at its highest level since the year 2000.

Unfortunately for the bulls, total volume in both exchanges was lighter than the previous day's levels. Turnover in the NYSE these 10%, while trade in the NASDAQ was 12% lighter. This means that last Friday's advance was more the result of a lack of selling, as opposed to institutional buying interest.

In last Friday's (July 12) newsletter, we pointed out in detail the potential by setup in a popular semiconductor ETF ($SMH). Specifically, we pointed out that $SMH had broken out above near-term resistance on the daily chart, as well as above long-term resistance on its weekly chart.

After the July 11 breakout, we wanted to wait for additional confirmation that the breakout was going to hold before before buying it. When a trade setup is based on a weekly chart timeframe, we simply look for a weekly closing price above resistance of the breakout.

Since the price closed above resistance of the breakout level on the weekly chart last Friday, $SMH is NOW an ideal intermediate-term ETF trade candidate. Because of this, subscribing members should note our specific entry, stop, and target prices for this SMH trade setup on today's watchlist:



A lot of false breakouts occur on the daily chart patterns of stocks and ETFs, but the WEEKLY chart pattern breakouts are much more reliable and usually lead to longer uptrends (before the inevitable correction comes).

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.