Leadership Emerging EXACTLY Where We Need It

Nothing is ever entirely perfect when we look at the stock market.

I can always poke holes in it, if I choose to. But it's the BIG Picture that we need to say most focused on and, of course, ignore the worthless media. This morning I saw a headline that said we should really be worrying. Why? Because the stock market is rising. Yep, now THAT is even a bad thing, according to the media. I just laugh. Let's turn to the charts instead.

Recently, I told EarningsBeats.com members to watch the relative strength of technology (XLK). The XLK is the sector ETF that leads bull market advances - usually. Check out this 3-year relative strength weekly chart:

Enter Technology (XLK):

The green-dotted vertical lines highlight the relative breakout of the XLK after months of relative weakness and/or consolidation. It's important to note when the XLK makes a relative breakout of this nature as it portends months of additional strength ahead. At least that's been its history. It also corroborates the market bottom call in mid June.

What does this mean?

• Now that sentiment has "reset" and leadership has rotated back into technology, let's just watch the rising 20-day EMA (not pictured on chart above) on the benchmark S&P 500. So long as price stays above that key moving average, it's full speed ahead!.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.