With two more days of distribution this week the market is telling us it's not a buyer's market. But we expect volatility to remain high, and would not be surprised by anything going forward. Thursday's distribution may actually be a bit of misnomer as the S&P 500's decline was marginal. Short-term pivot points on the charts are commonly marked by high volume. The 50-day MA will be the key marker in coming weeks.

Whip-lash Wednesday. The major indexes posted a fast turnaround to break a brief decline. No one can ever say for sure if this marks the bottom of a pullback, but our analysis has turned upbeat.

Internals Turn Ugly

The S&P 500 tallies in its second distribution in a row. With no indication of selling volume dry up we need to stay cautious. We draw added concern over the internals, which show for the first time in a month more 52-week lows than highs. Use stop losses accordingly, especially be cautious of letting a profit turn into a loss!

Red Flag

Heavy distribution on a "key intraday reversal" is a clear Red Flag for the market. We want to protect ourselves from further downside by setting stop losses. Basically any profit held should not be allowed to turn into a loss.

Intact, Trend Up

The Broader market remains firmly "trend-up." Tuesday's accumulation is a clear supporting factor, as is the market's mild reaction to the traditional "earnings jitters" we often see before the reports start flowing in. Perhaps our strongest sign that the rally is intact is the absent public hype over new highs in the indexes.

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Range Bound

Another tight range-day for the broader maret. We're maintaining a bullish bias with orderly pullback action suggesting eager sellers are absent. We are a little concerned over the lack of volume, but would be more concerned to see the market churn sideways on high volume. What ever selling is taking place right now is most likely profit taking.

Distribution, We must obey

You have to look really close, but the S&P 500 made a distribution day. Basically it doesn't count for much. We're only interested in heavy and obvious selling to count as institutional disinterest in this Bull. This week in general has been quiet, which bodes well for the upside. We want to see the sellers dry up. But be on the lookout for anything. The market can and will do anything it wants. It's our pre-defined entry and exit points that we must obey.

Questionable Breakout, Cypress Semiconductor - CY

Technology may be the broader market's leader, but the traditional backbone of the sector, Semiconductors, is not agreeing with the move. Cypress Semiconductor (CY) has the qualities this market has been embracing, but as with most issues, it will ultimately trend where its parent sector goes. CY is also questionalble for its light-volume breakout. The following two charts show this divergence.

Celgene Corp. - CELG - Rising

It's good to be a bull. Lack of mass media on the major indexes approaching new highs bodes well for the upside. But even as Jim Cramer and Bill Gross make their cases for selling it's always best to stay with the tape. Our recent breakout in Celgene Corp. (CELG) has made its third accumulation day for the past two weeks while pegging a new high.

Lots of talk on the potential of Biotech in this market environment.

But we're not so hot on how the borader sector is performing and will become concerned if the recent low-volume advance crumbles with heavy selling: