The Critical Chip Levels That Determine Follow-Through Potential

by Roger Scott | Sep 22, 2026

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If you’ve been tracking semiconductors with me, you know we’ve been waiting for this moment. The VanEck Semiconductor ETF (SMH) rose 4.03% in the latest session to close at $595.43, breaking above both the 100-day moving average and quarterly VWAP.

That’s the kind of technical alignment that can fuel sustained upside, but not every breakout leads to a lasting move.

I updated my VWAP settings to reflect the quarterly options expiration on Friday, as we do every quarter. If you’re following these levels, make sure you’ve adjusted yours to match. The new quarterly VWAP is now a critical reference point, and SMH closing above it is exactly what we wanted to see for bullish follow-through.

When the market dropped and everyone was panicking about AI moving too fast, I told you it was an opportunity to buy. I didn’t dump my Nvidia (NVDA) position, and that conviction is paying off.

But even after SMH’s strong close, we’re not out of the woods yet.

What the Close Confirmed

We needed SMH to close above the 100-day line — not on it and not below it. Its $595.43 finish delivered that confirmation while putting the fund well above the $577 to $579 support zone. Holding above the breakout levels would create an opportunity for follow-through in the coming sessions.

Don’t mistake one strong session for a confirmed trend change, however. The put-to-call ratio is overextended, which can help spark a short-term rebound as bearish positioning unwinds. The 4% gain shows real momentum, but it doesn’t necessarily establish the foundation for a sustained advance.

We are still in deep trouble beneath the surface. Only 48% of Russell 1000 stocks are trading above their 200-day moving averages (MA). Because the index represents the 1,000 largest U.S. stocks, that weak participation tells us the broader market remains vulnerable even as semiconductors rally.

The Levels That Will Make or Break This Rally

The next test is whether SMH can hold its breakout rather than surrendering the move. The $577 to $579 area remains the line in the sand. A decline into the prior gap would weaken the rally, while continued trading above the 100-day MA and quarterly VWAP would support the bullish case.

China looks constructive and momentum has improved, but we need broader participation beyond the initial surge. Crude oil and bonds remain major drivers of technology stocks, and their direction will help determine whether semiconductor strength can expand or volatility returns.

Keep your eyes on those intermarket signals and the key SMH support levels. The latest close was encouraging, but discipline still matters. Don’t chase if the structure begins to crack.

I hope that helps!

Roger Scott
Roger Scott Trading

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