I would not be buying this chart. Would you? The SOX had its last glory day (in the current bull market in inflation) a year ago with a double top. Bulls are spinning all kinds of tails about why everything is coming up rosy in 2007. Liquidity running amok (one Yen carry away from a train wreck), 3rd year of presidential cycle (well, the 2nd year didn't work so well in reverse so who's to say the 3rd year will hold to convention?) and the Dow theory Tranny confirmation (Steve Saville makes a good point that the inflation bull began with a Dow theory bearish confirmation so why not have it end with a bullish one?).

If the SOX fails support @ 450, then the next noted range comes into play quickly. If that fails, a lot of "buy the dippers" are going to get blown up. The market needs a correction at the least. For clues as to whether or not something more serious is in the offing, it is a good idea to keep a close eye on a leading index like the SOX. The market may indeed eventually head higher in 2007, fueled by liquidity gone wild, presidential hype and bullish euphoria, but the SOX is hinting of a break down at the moment. If it becomes a full fledged rout, we will have a strong bearish signal for the market in the near to intermediate term at least.