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Red-hot chips trade has more room to run to records, according to one chart

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Why this investing pro is long on Advanced Micro Devices

The semis stocks are surging in the past month.

The SMH semiconductor ETF, which holds top stocks such as Intel and Texas Instruments, has raced nearly 9% higher since mid-October, more than double the gains on the S&P 500.

Todd Gordon, founder of TradingAnalysis.com, told CNBC's "Trading Nation" that one "insanely symmetrical" chart suggests new highs ahead.

"If you look at the long-term chart here of SMH we've actually been channeling quite well," Gordon said on Tuesday. "We won't see resistance until about $150 on the upside."

Gordon added that the last three declines in the semis have mirrored one another — the drop in 2011, 2015 and over 2018. Those fall within an upward channel taking the SMH ETF up to $150.

Individual stocks in the group could power the break higher, according to Gordon.

"Look at names like AMD breaking a 20-year downtrend — I'm long the name and I'm looking to add, not take profits. Intel's on the cusp of breaking out, so I think there's a strong possibility we continue," said Gordon. "We're not going to fall in to resistance until about $150 sourced all the way from the credit crisis lows, so I like the group higher."

The SMH ETF would need to rally nearly 14% to get to $150. It would also mark an all-time high for the stock.

Quint Tatro, president of Joule Financial, says recent gains look like investors trying to capture the move back up to record highs.

"What we're looking at here … is a catch-up trade. I think active managers that are behind the passive indices are trying to find the hot momentum group. And I think that works into the end of the year. We're not a fan of chasing momentum here," Tatro said during the same segment.

For those looking for a similar catch-up trade, Tatro sees opportunity in a different corner of the market.

"Look at the small cap index. It's an index that really hasn't done anything, this year trailing 12 months, I think you've got a really nice risk reward trade buying the IWM with a 5% stop. Same thesis playing catch-up with the active managers here," said Tatro.

The IWM Russell 2000 ETF, which tracks small-cap stocks, is up 18% year to date. The large-cap S&P 500 has added nearly 24%.

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