Bulls Battle Back, but Have Their Work Cut Out

Bulls took a counterpunch yesterday and defended the territory they had to defend. This is an interesting development but we stand by yesterday's analysis. Overhead resistance after the high volume reversal day is going to be formidible. Likewise, money continues to roll into the Dow and the S&P bounced on light volume. These are not good developments if you are firmly planted in the bull camp. On the other hand, tech showed some life yesterday and there is a very good chance we will see the semiconductors make a move. The SMH is bouncing firmly off the all important $35.50 level. The level to watch over the next few weeks is $37. If it can regain this level it may mean that the correction we are looking for may come more in the form of a rotation back into tech rather than a broad reversal of all major sectors.