Chinese tech stocks continue to act well, and China Internet ETF ($KWEB) has recently broken out to new highs on strong volume. The pullback thus far has held above the prior breakout level at $36:



The shorter-term daily chart shows the recent pullback off the highs, finding support at the 20-day MA. Since there was a sharp pullback to the 20-day exponential moving average, the price action may stall out and trend sideways for a while before the uptrend resumes. If so, then we will look for a low risk entry point to emerge early next week:



On the stock side, we've seen a decent amount of new buy setups emerge, which tells us that the market may be able to follow through to new highs soon.

Most averages are now trading near the prior swing high after reclaiming about 75% of the the last wave down. The big question now is whether these averages can overcome last Thursday's ugly distribution day and the prior swing high by the end of the week, or if they will need to pull back in and test the prior swing lows.

Although our stock market timing model is presently in "neutral" mode due to the cluster of distribution days in the market the past few weeks, we continue to see bullish price action among leading stocks. $TSLA, $KORS, $SCTY, $FB, $AWAY, $INVN, $CMG, $YY, $IRBT and several others have held up really well and should continue to push higher.

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.