Yesterday's bullish broad market performance was impressive, and admittedly a bit surprising. The major indices have now absorbed recent overhead supply by breaking out above pivotal levels of technical price resistance. Most importantly, higher volume finally confirmed the rally for a change. All of this means that our previous intermediate-term "sell" signal on the market is now invalid, and our stock market timing model has shifted back into (cautious) "buy" mode.

Obviously, we were wrong about our expectation and timing for stocks to enter into a significant near to intermediate-term correction. But does that mean our system for timing the market no longer works? Of course not! No technical signal provides 100% accuracy (or we would already be gazillionaires). However, in three of the last four times that our market timing strategy generated a "sell" signal (April 2012, May 2012, and October 2012), it was followed by a broad-based correction of 5 to 10% below the highs (review details of the three most recent sell signals here).

This time, despite the overly bearish volume patterns in the market until yesterday, the "sell" signal simply did not work. Nevertheless, our reliance and confidence in our rule-based market timing technique has not changed one bit. Remember, we never try to predict future market action. Rather, our modus operandi is always to merely react to what the market is showing us at any given time. Now that the market is telling us to be long again, we are back to looking for stocks and ETFs breaking out to new highs, as well as equities with relative strength that have already broken out and are pulling back to support.

One ETF on our radar screen for potential pullback buy entry is iShares Nasdaq Biotech Index ($IBB). We mentioned this ETF two days ago as being in one of the only industry sectors with relative strength to the broad market (healthcare). With support of the healthcare sector confirming the move higher, we are now looking for a low-risk buy entry into $IBB on a pullback.

First, let's take a look at the longer-term weekly chart, which shows that $IBB just broke out above a valid base of consolidation last week:



Now, let's drill down to the shorter-term daily chart interval to take a look at our ideal "buy zone," the area we would like to see $IBB retrace to in order to buying this ETF on a pullback:



The rectangular area on the chart above is our ideal "buy zone" for $IBB ($149 to $150 range). A pullback to this level would be just above the recent breakout on the weekly chart, which should now act as new support. Furthermore, this range represents a Fibonacci retracement of 38.2% to 50% (from the swing low of February 26 to yesterday's (March 5) intraday high. We will be stalking this ETF for pullback buy entry in the coming days, and will be sure to notify subscribers in advance of our exact trigger, stop, and target prices for the $IBB swing trade setup if it approaches our target buy zone.

Please realize that it's okay to be wrong in your trade expectations (ie. expecting the market to go down, but it rallies instead), but you can't stay wrong. Put simply, brush the dust off and move on when you're wrong; don't fight the market trend. Still, this does not mean it's time to immediately jump back into the market in full force and start buying everything in sight. Instead, consider waiting a few days to ensure yesterday's breakout holds up. If it does, there will be plenty of time to profit from new long positions if the broad market starts a new leg up.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.