Two notable events occurred Monday – here they are

The broad market closed higher across
the board Monday, but selling pressure in the final thirty minutes
once again prevented the S&P 500 from breaking out above its 1,295 resistance
level. Strength in biotech and software stocks helped the Nasdaq
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secure a 0.9% gain, while the small-cap Russell 2000
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advanced 0.6%. Weakness in energy and mining shares caused both the Dow Jones
Industrials
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0.4% respectively. The mid-cap S&P 400 also showed relative weakness and closed
only 0.2% higher.

Total volume in the Nasdaq increased by 12% yesterday,
enabling the index to achieve a bullish "accumulation day," but volume in the
NYSE was 3% lighter than the previous day’s level. Despite the Nasdaq’s higher
turnover, volume was still below its 50-day average. In fact, it has been six
days since turnover in either exchange exceeded average levels. Institutional
participation remains curiously absent and, as such, we need to be prepared for
a swift move in the markets when institutional traders return to the scenes.

One industry that turned in an impressive performance
yesterday was Retail
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PowerRating). The 1.9% gain in the sector caused the $RLX to
close at a new 6-month high and just below the high of its 4-month
consolidation. A breakout above the consolidation in the $RLX could result in
long setups in a few of the ETFs that track retail stocks. The daily chart of $RLX
below illustrates the potential breakout above consolidation. Notice also how
the 200-day MA (the orange line) acted as support earlier this month:

RTH (Retail HOLDR) is the most popular ETF that tracks the
sector, but IYC (iShares Consumer Cyclical) is another option to trade. In the
case of RTH, we like it long over yesterday’s high of 99.03, as that would
result in a breakout above the prior high.

In the broad market, two notable events occurred yesterday. On
the bullish side, the Nasdaq Composite finally closed above resistance of its
primary downtrend line that has been in place since the high of January 11.
However, the bearish factor is that the S&P 500 reversed at the end of the day
after probing above resistance of its prior high. The first chart below
illustrates the Nasdaq’s breakout above the downtrend line, while the second
chart illustrates the S&P’s recent "line in the sand:"

As you can see by the Nasdaq’s breakout, the technical picture
is improving in the broad market, but the 1,295 level on the S&P keeps acting
like a brick wall. If the S&P can get in gear and close above that level, it
will certainly put the bulls at ease because the Nasdaq is looking pretty decent
now. But the S&P could be in trouble if it does not break out soon. Each failed
breakout attempt weakens the resolve of the bulls, who will eventually "throw in
the towel" if the index does not break out. Such action would undoubtedly
attract short sellers who could quickly reverse the recent bullish picture in
the market. This is especially true considering that stocks have been inching
higher on only very modest volume. We are prepared to short a possible failure
in SPY (S&P 500) and have listed the trigger, stop, and target price of this
trade setup for subscribers below.