Technical Analysis: Spear Alpha ETF Consolidation Signals Next Break Ahead As Nvidia Trades Near All-Time Highs

Zinger Key Points
  • SPRX is an actively managed fund offering investors the opportunity to achieve more than passive tracking of the broader market.
  • The ETF has been consolidating recently on decreasing volume, indicating healthy consolidation may be taking place.

Spear Alpha ETF SPRX was trading flat on Wednesday, continuing to trade sideways within a tight range between about $22.60 and $24.50 on decreasing volume.

The actively managed fund provides exposure to various stocks falling under the themes of enterprise digitalization, automation and robotics, artificial intelligence (AI), environmental focus and decarbonization, photonics and additive manufacturing and space exploration. The fund has outpaced Cathie-Wood's flagship Ark Innovation ETF ARKK, with the former rising about 3.6% year-to-day, while ARKK has dropped 4.24% over the same time period.

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Recently, some of the stocks within the fund have been trading within reach of their all-time highs, indicating investors remain increasingly bullish on the companies the fund holds. NVIDIA Corporation NVDA surged 85% this year and is the largest holding within the fund, weighted at 10.88%.

Similarly, Zscsaler, Inc ZS, the second largest holding within SPRX, weighted at 10.2% skyrocketed 193% between May 3, 2023, and Feb. 8, 2024, before beginning to retrace.

For investors, particularly those who believe in the power of diversification, SPRX holds many other popular stocks, including Advanced Micro Devices, Inc AMD, weighted at 7.84%, Snowflake, Inc SNOW, weighted at 7.01% and Shopify, Inc SHOP, weighted at 4.39%.

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The SPRX Chart: After reaching a new all-time high of $25.66 on Feb.12, SPRX entered into a downtrend, retracing about 11.96% between that date and March 19. On Monday, SPRX negated the downtrend by forming a higher low above the most recent low of $22.59 and on Wednesday, the fund retested that level and support and bounced upward.

  • The back test of the support area has caused SPRX to print a possible double-bottom pattern at that level. If the formation is recognized, SPRX is likely to bounce up higher over the coming trading days. For a new uptrend to confirm, the fund will eventually need to print a higher high above the March 21 high of $24.02.
  • During SPRX’s retracement, volume within the fund has been decreasing, which indicates healthy consolidation is taking place rather than that the bears have gained control. If the ETF breaks to a higher high, big bullish volume may begin to increase.
  • Bearish traders want to see SPRX drop to a new low on increasing bearish volume. If that happens, the higher low and the double bottom pattern will be negated and selling pressure could accelerate.
  • SPRX has resistance above at $23.50 and at $24.47 and support below at $23.06 and at $22.78.

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