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Sector Watch
UUP (dollar)
Last weekend, we were looking at UUP hitting some resistance between $27-$28. On Monday, it got there and preceded to let off some steam. It hit $26 on Thursday and jumped back up on Friday. The chart still looks bullish, especially with UUP closing above the 10-day MA. UUP could retest that $27-$28 resistance again.
USO (oil)
Last weekend, we said that there's a strong support at $50 for USO. Indeed, it tested $50 this week and bounced. It is negotiating with the 10-day MA right now. The MACD is showing a bullish crossover. The next resistance is at $60.
GLD (gold)
Last Weekend, we said that "$75 level could now become a resistance". It tested that level and came back down. It closed below its 10-day MA, which is a bearish sign. It could test $70 again. If $70 holds, we'll like see more bounces in GLD.
XLF (financials)
We looked at $13 as a support level. XLF managed to hold that level. It closed above the 20-day MA, which is a bullish sign. The MACD has made a bullish crossover. Its immediate resistance is now the 30-day MA, around $17. The $15 level and the 10-day MA are now the immediate support levels. The financial sector is a very important component of the market's recovery. We'll watch XLF closely.
Market Forecast
The market finished October on a strong note. For the week, the Dow was up +946.06 points; SPX added +91.98 points; Nasdaq gained +168.92 points! In my Market Forecast last weekend, I said,
"Nasdaq closed below the Oct 10 low, and is looking at 1500 for support. SPX tested and barely held 850. The momentum is still very much on the down side. In order for any rally to hold, VIX has to go and stay below 60; SPX and Nasdaq also need to hold above their respective 10-day MAs. The big thing to watch this week is the 10-day MA (red line) on major indices. If the 10-day MAs curve down, it could signal further slide in the markets."
On Monday, the downward momentum carried the market lower. But, Nasdaq was able to hold 1500 and SPX held 850. On Tuesday, the market bounced and was able to continue the rally throughout the week. VIX closed the week below 60. SPX and Nasdaq both closed above their respective 20-day MAs. Their 10-day MAs have flattened and are looking to turn up. These are some encouraging signs. Let's see how the charts look now:
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