The major indexes sold off after testing their 50-day moving averages to the upside.

Modest gains for the week show some improvement for the Bulls after the “flash crash.”

But for us to become Bulls, we’d have to see the averages regain footing above their 50-day moving averages. It would also be encouraging to see it happen with the endorsement of a 2% rally on strong volume for a Follow Through Day.

Volume over the last month has clearly favored the sellers, as multiple Distribution Days, where volume on a down day exceeds the previous day, indicates institutions have been unloading.

It’s the selling volume, not price trend, which kept us bearish of late.

In the bigger picture, the trend is still clearly up as the major indexes travel above their long-term 40-week moving averages.

Any test below these averages would likely start with a breakdown of a sector to lead that action. Sectors already below this mark include Commodities, Broker Dealers, Drugs and Energy.

The Broker Dealers are especially important to keep an eye on for their tight relationship to consumer sentiment and the health of the economy. Last week the ($XBD) tested the bottom of a yearlong trading range. Any breakdown would be significant.

Another pace setter, the Semiconductors ($SOX), would also disrupt a strong upward trend that has formed over the last year.

News wise, next week many key retailers are set to announce earnings, which will likely set a tone for trading.

Last week, the market saw a handful of breakouts from Consumer Goods stocks like Hasbro (HAS), Altria (MO), Pepsico (PEP) and Sara Lee (SLE).

Should the breakouts hold, they may become market leaders, a key ingredient for a sustainable bull market.

It would be even more encouraging to see technology names follow suit, as IBM (IBM) appears poised to do so.

Growth stocks launching from technical bases included Affymax (AFFY) and Maidenform Brands (MFB.)

The success of these stocks will be telling of similar ones ready to do the same.