Bearish momentum from the previous afternoon's weakness caused the major indices to move lower last Friday morning, but stocks found support and stabilized after the first hour of trading. Preferring to be non-committal ahead of the weekend, traders kept the main stock market indexes in a choppy, sideways range throughout the rest of the day. The Dow Jones Industrial Average lost 0.5%, as both the S&P 500 and Nasdaq Composite declined 0.6%. Continued relative strength in small-caps enabled the Russell 2000 to eke out a gain of 0.2%, benefiting our position in Ultra Russell 2000 ProShares (UWM). The S&P Midcap 400 closed lower, but only by 0.2%. For the week, the main stock market indexes all finished near the flat line.

The most positive aspect of last Friday's session is that the market's losses occurred on lighter turnover. Total volume in the NYSE eased 10%, while volume in the Nasdaq was 4% lower than the previous day's level. Despite choppy price action last week, the stock market's volume patterns clearly remained bullish. Last week, the S&P 500 only advanced in two of the five days, but both sessions were "accumulation days" that showed institutional buying. Similarly, all three days of losses were accompanied by lower volume. Higher volume on the "up" days, and lower volume on the "down" days, is one sign of a market that is healthy "under the hood." by advancing on higher volume.

One ETF that has showed bullish divergence to the broad market recently is the Broadband HOLDR (BDH), which stealthily climbed 3.2% last week. BDH is comprised of a basket of 17 stocks related to the computer and mobile networking industry, although Qualcomm (QCOM) currently represents a weighting of more than 50%. Not only has BDH been showing relative strength, but the daily and weekly charts are both positioned for breakouts. First, take a look at the daily chart of BDH:

The dashed horizontal line on the chart above marks resistance of the prior highs of BDH, just over the $14.50 level. Last Thursday, BDH tested that resistance level, but pulled back slightly when the major indices sold off. Nevertheless, the ETF held up pretty well against the broad market weakness, so the slightest rally in the major indices this week should enable BDH to break out above the horizontal price resistance level shown above. Next, check out its longer-term weekly chart: