After shaking off mild weakness in the morning, stocks moved higher across the board yesterday, enabling the S&P 500 to close above resistance of its multi-week trading range and at a fresh five-year high. The S&P 500 gained 0.4%, while strength in the tech sectors helped lead the Nasdaq Composite to a 0.6% gain and another new five-year high as well. The S&P Midcap 400 Index advanced 0.7%, the small-cap Russell 2000 rallied 0.5%, and the Dow Jones Industrial Average closed 0.3% higher.

Total volume in the NYSE was 6% higher than the previous day's level, but volume in the Nasdaq was 1% lighter. The S&P's gain on higher volume was enough to register a bullish "accumulation day" in the index, but turnover in that exchange still came in below its average level. Curiously, volume in the NYSE has exceeded average levels in only one of the past thirteen sessions. Although the Nasdaq's volume was fractionally lighter, market internals were equally strong in both exchanges. Both the NYSE and Nasdaq saw advancing volume exceed declining volume by approximately 2 to 1.

Among the strongest sectors yesterday was the Semiconductor Index ($SOX), which surged 2.8% higher and broke out of a choppy, sideways range that has been in effect for the past three weeks. The $SOX still must contend with overhead resistance of its 50-day moving average, less than 1% above yesterday's close, but the index may be waking up:

If the $SOX busts through its 50-day moving average, it may present ideal entry points in ETFs such as iShares Semiconductor (IGW) and the Semiconductor HOLDR (SMH). Of the two, IGW is closer to a new high and therefore has less overhead. But the real performer of the Semiconductor ETFs is the PowerShares Semiconductor (PSI). Although the $SOX itself remains nearly 6% below its 52-week high, relative strength in PSI enabled that ETF to break out to a new all-time high yesterday. The dynamic manner in which the PowerShares family of ETFs determines its underlying stocks within each sector often enables those ETFs to show relative strength to the actual sector indexes. Note, however, that the PowerShares have not yet received much popularity because the entire family was launched less than a year ago.

While the tech sectors such as Semiconductors and Internets have begun to regain buying interest, the Biotech Index ($BTK) continues to drift lower. Yesterday's fractional loss in the index means the $BTK continues to consolidate near the lows of its recent trading range. If the index sees any further selling pressure, it will drop below support at the 698 area, which could accelerate downside momentum. Looking at the daily chart, you will see that the index has been in a steady downtrend since the high of February 27 of this year. Overhead resistance of both the 20 and 50-day moving averages is further contributing to weakness in the index:

Of the Biotech ETFs, we feel the Biotech HOLDR (BBH) has the most bearish looking chart because it is the only one that is below its 200-day MA. BBH is clinging to support of its prior low at the 190 area, but we could see a nice selloff if it falls below that. For that reason, we remain short BBH from the 192.50 area.

As for the broad market, it is starting to look better as the indices grind up to new highs. However, we prefer to focus our attention on specific industry sectors with relative strength or weakness instead of the broad-based ETFs. Doing so provides a better risk/reward and less chance of getting whipsawed out of our positions.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and Morpheus Trading Group, a trader education firm launched in 2001 that provides daily technical analysis of the leading ETFs and stocks.  For a free trial to the full version of The Wagner Daily or to learn about Wagner's other services, visit MorpheusTrading.com or send an e-mail to deron@morpheustrading.com.