Click to Enlarge

The Philadelphia oil services and semiconductor indices were two of the weakest on Thursday, both down almost 3.5%. The A/D numbers were almost 4:1 negative, which as we discussed in this recent trading lesson, is not encouraging. Both sectors show well-defined chart support that needs to hold on any further decline.

Click to Enlarge

The emerging markets ETF (EEM) made new highs on Monday as the major 61.8% resistance was reached. Volume on the rally has not been impressive, and while the weekly OBV is positive, the daily did not confirm this week’s highs. If daily OBV support is broken, it would signal a correction in the intermediate uptrend.

Click to Enlarge

January crude oil remains it its flag formation despite the sharp drop last week that took the OBV below its support. The weekly OBV made new highs in October and continues to favor an upside breakout. January crude (as of noon) is trading above its downtrend, currently at $80.50, therefore, today's close could be important.

Click to Enlarge

With the market averages at new highs, it is important to see what sectors are leading and lagging. The materials sector ETF (XLB) has broken out to the upside with targets at $33. The energy (XLE) and financial sector (XLF) ETFs are still lagging, though XLE shows a series of higher highs and higher lows. A breakout in crude oil could push XLE to new highs.

Click to Enlarge

Stocks closed with nice gains on Monday and the short-term momentum studies have broken out to the upside, consistent with further gains. The market internals were strong as the number of new highs did confirm prices (see today's Tips for Traders feature for more), but the A/D lines on both the NYSE and NASDAQ have not yet confirmed the price action with key support now at the November lows.