Moving on to the S&P 500 (represented here by the SPY): Last week the SPY bounced off the trend, which started in 2003 and closed the week at its highest level since January of 2001. We can find no reliable signs of distribution here. In fact, our calculations reveal continuing accumulation. This is not bearish folks. We don't know how the market is going to respond to the worries we mention above over coming weeks, but technically the S&P is set to launch much higher.
Now let's look at the semiconductor sector (represented here by the SMH): The tech sector is going to be a lead weight around the neck of the market if the semiconductors can't find a bid. The SMH, as you can see below, is primed and ready to rally off of support. Unlike the S&P, there are signs of distribution in the sector, but this does not appear to be a threat to a projected rally. Unless the SMH closes below $36 any remarks that the bears have taken control of the market should be ignored.Bottom line: Despite where you think the market is going or where you think that it should go, those who wish to make money need to react to what the market is doing right now. Right now the weekly charts are bullish so we stay long. This does not mean that we can let our guards down and stop using good money management. Indeed now is the time to exercise even more disciplined money management practices. Take profits off the table by selling at least partial share sizes into strength. Selling into strength frees you up to buy the dips and gives you the freedom to look at your positions much more objectively than those who hold and hope. This is an important lesson that takes pros years to learn. Save yourselves the time and heartache by learning today what takes others a lifetime.