Welcome back everybody. Hope your weekend was a good one. But, if it wasn't, I think we can give you something good to start the week - and the summer - with. [The first day of summer isn't until June 21st, but for most of the country, the humid heat is already near peak levels. That's close enough for me.] We'll look at that in a second for you. First, let's slice and dice this maniacal market. Whatever I'll be short and sweet today, since the market's lack of movement leaves me little to talk about. I'll simply point out that the market tried to fight its way back above the 20-day moving average line, but when push came to shove later in the day, there just wasn't enough gas in the tank to keep the rally going. For the S&P 500, that 20-day moving average line is at 1646.67. The S&P 500 peaked at 1648.69, but fell back to a close of 1642.81 before the closing bell rang. The volume behind the failed bullish effort was also amazingly weak, so anybody who was bullish based on last Friday's action may want to dial that optimism down quite a bit until further notice. The bottom line here is, the S&P 500 - along with the whole market - is still range-bound, trapped under the 20-day line but above some pretty solid support around 1608. We have to respect that, and be patient while the market works things out for itself. Trying to guess what it will do next right now is little more than a coin toss. We'll get out our clue soon enough, and there's going to be plenty of movement to trade once the ball gets rolling. Hang tight. I'll just add this though... it didn't take much for last week's buyers to duck out early this week. The mood is still leaning bearishly, even if the bigger trend is still technically bullish. Best of the Best This Summer OK guys, I was originally planning on bringing you a new trading idea today, but I'm going to table that topic for at least a day and paint a bigger picture first. We've talked about it before, but it's been a while so it bears repeating - if you can pick the right sector (or avoid the wrong one), statistics say that 40% of your job as a stock-picker is done. In other words, 40% of an individual stock's movement is sector-driven rather than company-driven. Now, I make that point to you today to stress the importance of what I'm about to tell you. I think I've found a sweet spot for this summer... the technology sector. It's not just a hunch either. I've got a couple of specific/scientific reasons for my bullishness on this industry. First and foremost, I don't know if you've noticed this or not, but the technology sector's stocks have been the best performers since the mid-April lull. While normally that would mean the group is overbought and therefore off-limits, the tech sector was also one of the market's weakest performers between the November bottom and mid-April. Point being, there's still a lot of room for the technology sector to keep rising, and the group is clearly using that room, starting by lapping other sectors. The other reason I'm digging the tech sector heading into Q3 is fundamentally-based. Believe it or not, the tech sector is almost the cheapest one out there right now. Not that a P/E ratio is anywhere close to the whole story, but to the extent that it matters, the S&P 500 Technology Sector's 2013 (half completed/half projected) P/E of 13.9 is third-lowest out of ten sector groups. Its projected 2013 growth rate is a healthy 12.0%, which is second-best out of ten sectors. The only one that's better is the consumer dictionary sector's 2013 earnings-growth outlook of 16.1%. Problem: The average consumer discretionary stock is priced at 18.1 times 2013's likely earnings. That's not exactly a bargain. You can also see that the tech sector's earnings growth projection through 2014 is solid, even if not red hot. Standard and Poor's says the S&P 500's technology names should grow 14% next year compared to this year's likely earnings totals. And just for the record, the tech sector's been as reliable as any other when it comes to meeting forecasts. Oh, and you can also see the S&P 500 Technology Index is knocking on the door of its ceiling at 510.0. My point to you is this: Tech stocks look relatively stronger than any other group right now, for a couple of different reasons. I suspect it's going to be one of the best, if not the best, arenas to be in during the summertime lull. The annoying X-factor here is the possibility of a market pullback; even a great sector can start to unravel if the marketwide tide turns really, really bearish. But, if it's just going to be a lethargic summer, then I think you'll want a little more technology exposure than usual. Just because I told you I'd do it, this summertime-strength from tech stocks is a secondary trend, measured in weeks. If you're going to play it, the best way to do it is commit to it for several weeks. It's not the kind of thing you want to trade in and out of every few days (a tertiary trend), and it's not like the technology sector is positioned to lead the entire bull market to its final destination. [Check this out if you missed the original primary, secondary, and tertiary trend chat.] One way to play the trend is with an exchange-traded fund; the fund I used in the comparison chart above is the iShares Dow Jones US Technology ETF (IYW). But, if you want a stock, you'll just have to wait until later in the week. I was going to name names today, but after I thought about it, I figured I better tell you the whole reason why I liked it before I told you the ticker. It's as much of a sector play as it is an individual company I like. OK, with everybody's tech-sector juices flowing, let's keep the ball rolling on our recently-launched stock-rating system. Today's focus/voting stock is SemiLEDS (LEDS), which is actually one of our current focus stocks. We've traded in and out of it with a lot of success, and as of the last look (from April 30th) we were out. Consider this newsletter the official notice that we like SemiLEDS again. It's been building steam for a while, and today's pop pretty much seals the deal. It's not the official "technology" pick we're talking about above, but it's one we like. As of right now, our community has rated LEDS a five-star stock, but I think that's only because there aren't too many votes on it yet. Let's see how great it is once all you guys and gals chime in. And hey, while you're at it, feel free to post any thoughts or comments you have about SemiLEDS as a blog entry, or even just some notes linked to your buy/sell call. We're not looking for Shakespearean-caliber comments - just tell us what you like or don't like. See ya tomorrow.