Although stocks got off to a strong start last week, last Friday's chop was the third consecutive day of tight-ranged price action for most of the major indices. Total volume levels eased on both exchanges, which is bullish (and to be expected) when the price action is tight.

With the NASDAQ Composite breaking out to a new 52-week high last week, our model for timing the market was forced back into "buy" mode. This is because it is impossible to have a "sell" signal in place when at least one of the main stock market indexes is setting higher highs and higher lows on the daily chart. The NASDAQ's breakout to a fresh 52-week high is shown on the daily chart below:



Although the index has not yet rallied back to a new high, the S&P 500 has staged quite a comeback as well. As of Friday's close, the S&P 500 SPDR ($SPY) is sitting only 1.2% below its 52-week high:



After a strong, six-month advance off the lows of 2012, iShares Spain ETF ($EWP) has been consolidating in a tight range just below its monthly downtrend line. Now, a potential long-term, bullish trend reversal is underway.

On the monthly chart of $EWP below, notice the international ETF is now trading above its downtrend line (dashed blue line) and is poised to breakout from a tight, eight month base of consolidation:

 

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.