All major U.S. indices closed higher last week following a loss the week earlier, as the market continued what has thus far been a choppy but relatively flat 2015. One exception has been the tech-heavy Nasdaq 100, which led last week, closing 4.3% higher, and is now up 7.1% for the year. 

As I have been stating here for some time, the market is vulnerable to an overdue summer correction as the Federal Reserve gets closer to an inevitable interest rate hike. However, as long as perennial market leaders like the Nasdaq 100 and small-cap Russell 2000 continue to outperform the broader market, this year’s modest overall advance can continue in the near term.

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All sectors of the S&P 500 finished in positive territory last week, led by technology and consumer discretionary. 

Although energy was the weakest sector, my own ETF-based metric shows it had the biggest inflow of sector bet-related investor assets over the past one-month and three-month periods. This suggests the likelihood of more outright strength and relative sector outperformance versus the S&P 500 during the second quarter. Moreover, energy, which I have been identifying as an emerging investment opportunity since the beginning of the year, has already outperformed the S&P 500 by 7.3 percentage points since mid-March.

Resilient Technology Averts a Correction

Since the Feb. 17 Market Outlook, I have been discussing the breakout higher in the Nasdaq 100 from three months of sideways investor indecision, which targets a move to 4,600. In last week’s report, I said it was time for the index to “sink or swim,” having reached a level from which it needed to show some immediate strength to retain its bullish bias.

Swim it did. Not only did the index re-establish its 2015 advance with fresh highs, but the chart below shows that it also confirmed a fresh breakout from almost two months of sideways investor indecision.

This latest breakout, above the 4,484 March 2 high, targets a run to 4,650. The chart also shows that, with the exception of just a few days over the past six weeks, the index has managed to remain above its October 2014 uptrend line, which is another indication that the larger bullish trend is still intact. 

The bullish implications of this new pattern remain valid as long as the 4,484 March high contains on the downside as support.

Trouble May Still be Ahead

Despite last week’s resurgence in the Nasdaq 100, the much broader but positively correlated Nasdaq Composite is closing in on a major overhead obstacle — its March 2000 all-time high of 5,133, situated less than 1% above Friday’s close.  

Although major benchmark highs like this are often slightly exceeded on a near-term basis as investors negotiate the level, typically on increased volume, they are seldom meaningfully and sustainably broken without at a multiweek corrective decline first.

I would reconcile the conflicting messages of these two charts as indicating a positive near-term, week-to-week bias in the Nasdaq 100 but would consider doing two things:

1. Aggressively tightening protective stops once the 4,600 to 4,650 upside target is met.

2. Consider exiting long positions on a decline below the index’s 4,484 March 2 high and October 2014 uptrend line. 

Additionally, I view the formidable 5,133 area in the Nasdaq Composite as the potential starting point and catalyst for an overdue broader market correction.

Bottom Emerging in Commodities?

In last week’s report, I said: “I am seeing some early signs of strength scattered across various commodity markets like crude oil, gold, copper and platinum.” 

Although gold prices faltered last week, I continue to see signs of an emerging base. Meanwhile, Brent crude oil traded at its highest level since December. 

Another place to find emerging strength in the commodity space is in some of the broader ETFs, including the iPath Bloomberg Commodity Total Return ETN (NYSE: DJP), which recently began trading above its 50-day moving average, a widely watched minor trend proxy, for the first time in almost a year.

From an investment standpoint, this could be a relatively low-risk opportunity to participate in what looks to be an emerging one- to two-quarter advance.

Economically, strength in the commodity space suggests the market’s recognition of an upcoming cycle of rising U.S. interest rates and/or an emerging decline in the U.S. dollar — both of which I think are likely later this year.

Friday’s new closing high in the Nasdaq 100 clears the way for at least another 2.5% advance in the market leading tech bellwether. However, formidable overhead resistance less than 1% above the market in its broader-based cousin, the Nasdaq Composite, warns that the stock market’s upside may be limited from here before a long overdue correction finally emerges over the summer months.

From a more intermediate-term standpoint, I view recent strength in the iPath Bloomberg Commodity Total Return ETN as more evidence that a rebound in commodity prices is emerging. This could be triggered by a decline in the high-flying U.S. dollar and potentially sustained by the long-awaited rise in interest rates later this year. 

Editor’s note: The indicator that spotted the top performer in the S&P 500 in 2014 just flashed another “buy” signal. In fact, it tagged eight of 2014’s biggest winners — stocks that went on to soar 80%… 119%… even 266% all in less than a year. Get the name and ticker of the stock that just signaled “buy” here.

This article originally appeared on ProfitableTrading.com: Could This Number be the Starting Point for a Market Correction?​