All major U.S. indices closed up for the second consecutive week, led by the tech-heavy Nasdaq 100, which gained 3.7%. This puts them all back into positive territory for 2015. 

#-ad_banner-#Since late last year, I have been saying that leadership by technology was necessary to propel the broader market to new highs. It looks like we are finally starting to see that. Tech was the strongest sector of the S&P 500 last week, gaining 3.8%. 

Energy also made an impressive showing, advancing 2.8%. It has actually outperformed the S&P 500 by 5 basis points since the Jan. 19 Market Outlook, when my ETF-based metric showed energy had the biggest one-week inflow of investor assets. At the time, I said this suggested an “emerging buying opportunity in this unloved and washed-out sector.”

Moreover, the latest data shows that, through the end of last week, the biggest increase in sector bet-related investor assets over the past one-month and three-month periods was into energy, which should support further strength in the sector.

Tech Leadership is a Good Sign for the Bulls

In the Jan. 12 Market Outlook, I pointed out that the sideways price activity in the Nasdaq 100 since November represented temporary investor indecision. I said: “These indecision periods are usually resolved by a resumption of the previous trend, which in this case, would be signaled by a sustained rise above the 4,347 Nov. 28 high. If we get an upside breakout, it will clear the way for an eventual rise to 4,600.”

The chart below shows that the breakout I was expecting took place on Friday.

My initial 4,600 target, which is 5% above Friday’s close, remains valid as long as the upper boundary of the indecision area at 4,347 loosely contains the index on the downside as underlying support.

Time to Cash in on Starbucks

While a new buying opportunity in the Nasdaq 100 appears to be getting under way, another one of my recent investment ideas is ready for some profit-taking. 

In the Dec. 8 Market Outlook, I identified consumer discretionary as a sector with good upside potential heading into 2015. Specifically, I pinpointed a buying opportunity in Starbucks (NASDAQ: SBUX) with an upside target of $93.

SBUX nearly met that target last week, trading as high as $91.99 on Friday for a gain of nearly 10% in just over two months. For comparison, the S&P 500 is only up about 1% during that time.

While SBUX is just shy of the target, Market Outlook readers should consider ringing the cash register on long positions as the consumer discretionary sector has become overinvested and vulnerable to a pullback.

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Is Energy Bottoming?

As stated earlier in this report, the energy sector has outperformed the S&P 500 by 5 basis points since mid-January. As a result, some individual energy-related assets and indices are starting to show signs of life. 

The NYSE Arca Oil & Gas Index (XOI) recently rebounded back above its 200-day moving average, a widely watched major trend proxy, after testing and holding its March 2009 uptrend line in December and January. 

This recent strength indicates this price-weighted index of the leading companies involved in the exploration, production and development of petroleum is resuming its six-year major uptrend following a sharp collapse from the 2008 highs. 

This chart corroborates my recent analysis indicating an emerging buying opportunity in the beaten-down energy sector that could offer exceptional upside potential.

In last week’s issue, I discussed a “least bullish” extreme in investor sentiment on the Nasdaq 100, according to a survey of retail investors. As a contrary indicator, this suggested favorable conditions for a rise to fresh highs in the broader market.

Just one week later, the Nasdaq 100 has broken out from almost three months of sideways investor indecision, indicating the advance I’ve been expecting is under way and targeting an additional 5% rise to 4,600. 

Moreover, a similar breakout is emerging in several other indices, including the small-cap Russell 2000. If confirmed, it would be viewed as an even stronger indication of more strength in the overall stock market into the second quarter. 

Another potentially positive sign for U.S. stocks can be seen in the recent recovery in energy-related assets. Should this continue into midyear as expected, it would suggest a strengthening global economy.

This article originally appeared on ProfitableTrading.com: Is It Time to Buy This Washed-Out Sector?​