Stocks rallied in the morning session, sold off in the afternoon, and settled near unchanged levels. Turnover on both exchanges was lighter, suggesting that stocks were not being sold into strength near the highs (known as "churning").

Yesterday's stalling action may simply lead to a few days of choppy price action, but as we have seen the past few weeks, market conditions are certainly not reliable and the S&P 500 and Nasdaq Composite have yet to flash a true buy signal:



Notice the Nasdaq 100 ETF ($QQQ) reversed yesterday after bumping into resistance of both its prior swing high and 50-day MA. As such, a close above the 50-day MA in $QQQ should breathe some life into the market, and potentially spark a breakout to new highs in the S&P 500 (we are looking for the price to close the week above the 50-day MA, not just hold for one day).

We continue to hold $XOP from our breakout entry at $70.70 on 3/21. Subscribers to our nightly trading newsletter should note the new stop price for $XOP in the "open positions" section of today's report. We are running a tight stop on half of the position to protect our gain, while keeping a loose stop on the remaining half position because we want to see the rally continue to trend above the rising 20-day EMA.



Semiconductor stocks held up really well during the Nasdaq sell off. While the Nasdaq sliced through support of its 50-day MA and sold off to the 200-day MA before reversing, the Semiconductor Index ($SOX) basically remained above the 50-day MA. Note that the lows of the current base are at $560, which is the prior 10-year high:



We look for the price of the $SOX index to chop around for another week or two before eventually clearing the short-term downtrend line and moving to new 52-week highs.

The long-term monthly chart below shows the recent breakout to a new 10-year high in $SOX:



Although our timing model remains in "sell" mode, we are stalking semiconductor stocks and ETFs for potential buy entry if the stock market suddenly flashes a new buy signal because this sector is likely to lead on any strength in the market.

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.