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Last week, the market was up about 3%, moving back to a critical juncture of a technical support/resistance area. That makes the next move for the markets important since it will determine whether the direction of the next move is up or down, and it is critical to let the price dictate direction.

Technicians review many secondary indicators when attempting to forecast the future track that markets will take. One such indicator is volume. Since the February 18 peak, the markets have risen on low volume and dropped on significantly higher volume. In fact, last week's big rally was accompanied by the lightest weekly volume of the year.

Volume acts as the "juice" that drives the direction. It shows the investors' conviction for their trades. Therefore, low volume equals low conviction -- or so the theory goes. And, that calls into question the strength of last week's rally.

Another technical indicator is the Stochastic, which is a momentum indicator that compares the current price of a security against its price range over time. The monthly stochastics are at extremely overbought levels today, a scenario, which, historically, has preceded a 5% to 10% correction.

In the end though, price is truth and the primary indicator, and it is more important to follow the price rather than any secondary indicator. In a market environment like the current one, it is always best to invest in the leading sectors of the market. Year to date, the best sector, by far, is energy.

The energy sector is up 15% since the start of the year as measured by the

Energy Select Sector SPDR Index

(XLE) - Get Report

. With Brent crude oil prices trading around $115 per barrel, and unrest in many oil-producing countries -- with no end in sight -- energy could continue its run higher.

While higher oil prices are not good for consumers who are paying exorbitant rates at the pump, the energy companies aren't complaining, as their current earnings are benefiting. XLE has 43 holdings, however, its top two holdings are

Exxon Mobil

(XOM) - Get Report



(CVX) - Get Report

, up 14.3% and 17%, respectively, year to date. Chevron is the best-performing stock in the

Dow Jones Industrial Average

, so far this year. The two companies have a about a combined 30% weighting in XLE.

Technically, XLE appears to be challenging its near-term resistance of $79.22, as it was trading near $78.88 this morning. XLE has been on a solid uptrend since September and, given the tumultuous environment in the Middle East and North Africa, a near-term price target of $86 per share is warranted.

On a longer-term basis, XLE's all-time high of $91.42 will offer resistance, but XLE could make a run to $106 should oil prices remain over $100 per barrel for a sustained period. Place a stop at $72.80 for protection.

The jury is still out regarding the next, short-term move for the overall market. At times like this, it is advisable to employ good judgment and follow the market leaders. On a technical and fundamental basis, XLE meets all the criteria needed to make a sound investment decision in it today.

At the time of publication, Slusiewicz and Pacific Financial held no positions mentioned.

At the time of publication, Slusiewicz and Pacific Financial held no positions mentioned.

Jerry Slusiewicz has over two decades of professional investment experience. He has worked with individuals and institutions to manage monies for both short and long-term investment horizons. This extensive experience through various stock and bond market cycles enables him to offer a unique blend of professional investment counsel and personal service.