Friday's Trend Test a Success

On Friday the major indices survived the trend tests we outlined last week and we saw sectors bounce pretty much across the board. Most importantly, the SMH (Semiconductor Holders) saw buyers step in at its long term trend and the closing price left a strong high volume buying signal in the sector. Since this sector has been the anchor around the neck of the NASDAQ recently, a rally there should let tech take off. We should note however that we do not expect a sharp move off of support levels just yet. The bond market is still trying to find a bottom and as long as bonds continue to lack stability, the trading range in stocks is likely to continue. There is evidence that smart money is using this stock trading range to accumulate.