The broader averages all closed at levels not seen since June of 2001. That's right, four year highs on the Dow, S&P 500 and Nasdaq. Transports hit all-time highs again with the Financials also at multi-year highs. Alright, let's pop the cork we are back on easy street! Wait a minute something's missing……. oh yeah, the Semis. They're not even at monthly highs and lots of resistance overhead. This is a concern because no substantial rally has occurred in the market without the Semis playing an integral part.

Over the last few years, the market has been range bound. Every time the market seems to be breaking out and starting to trend we sell off and visa versa. We are in a sideways market. So, I'm playing the cards that are dealt to me, but I'm watching very closely the internals of the market to signal a sell off.

When doing my nightly screens, I try to identify strong stocks in strong industry groups. Another objective is to isolate a stock that potentially has a good short-term pop. Apex Silver Mines (SIL) broke out last Thursday and has since had a small pullback. Also notice that it is not as stretched to the upside like most of the stocks right now. So I feel the opportunity for a bigger pop is in my favor.

Apex Silver Mines (SIL)

Just to reiterate an earlier point, even though I'm somewhat cautious of the breakout of the markets, I'm still going to take the trades that show themselves. Use your stops on all trades and protect your profits and principle.

Tom Incorvia is a swing trader with 18 years of experience in the financial markets.  E-mail him at tincorvia@gmail.com.