Given the bearish price and volume action last week, one would expect the S&P 500 and Nasdaq Composite to test their respective 50-day moving averages before bouncing higher. However, a move above last Friday's high in the major averages could spark a bounce because most averages are at short-term "oversold" levels.

The Semiconductor ETF ($SMH) was hit hard late last week, potentially ending a sharp advance off the lows of February. If $SMH follows through to the downside, it will be difficult for the Nasdaq to push higher, especially when biotechs are already in pullback mode

The same can be said of the financials and the S&P 500. If last week's false breakout action in $XLF fails to recover quickly, financials may also need a few weeks of rest before heading higher.

If $XLF fails to hold the 10-week moving average, then a pullback to the 40-week moving average would be the next logical support level. As of right now, the odds suggest that $XLF will chop around from $21.20 to $22.20 range:



With the market rally losing steam, commodity-based ETFs are the place to be for swing trading on the ETF side.

After touching the 20-day EMA and reversing, our current long position in Uranium ETF ($URA) stalled out near the swing high the very next day.

When a swing trade stalls out at or near a prior swing high it usually signals that the price action will need more time to digest the last move up. But as long as $URA continues to set higher lows, any short-term consolidation should lead to a continuation breakout within the next two to three weeks:



If you are not already long $URA from our original entry in the Wagner Daily newsletter, you might consider buying a pullback to, or undercut of, the $17.50 area as a low-risk buy point.

Last week's selling action may be the start of a topping out process that could take several weeks to play out in the major averages. During this time, we may continue to see strong stocks like $KORS or $TSLA outperform the market while the number of leadership stocks narrow.

On the stock side, the plan is patiently wait for low risk entry points in leadership stocks that are still in trend mode above the 50-day MA. $KORS and $TSLA are examples of charts still in trend mode. There are several more, but these stocks are thickly traded and have great fundamentals.

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.