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It was another week of huge swings. Last weekend, in my Market Forecast (Please log in first, if you haven't; you can sign up for a FREE account if you don't have one), we looked at the support and resistance levels:
"Next week, we have the presidential election on Tuesday, Nov 4, which could provide impetus for the market to move. On the bearish side, the 20-day MA and 10-day MA now could serve as immediate support levels; breaking these could lead to testing of SPX 850 and Nasdaq 1500. On the bullish side, the 30-day MA becomes the immediate resistance. SPX 1000 and Nasdaq 1800 are important levels to watch, which could coincide with the 30-day MA next week. Breaking above these could lead to the daily upper BB."
Indeed, the market tested both the support and resistance levels within the same week! Before the election, the market held things up well. On Tuesday, SPX and Nasdaq tested the 30-day MA and SPX reached that 1000 level. I said on Tuesday night, "SPX and Nasdaq are both testing their 30-day MAs. SPX closed above 1000. These are the initial resistances that we look at this weekend in my Market Forecast. So, we have to be careful here. VIX intraday charts are nearing bottoms, but, have not bounced." Right after the election, on Wednesday, the market locked in profits and dove straight down; and, VIX bounced! The selling continued on Thursday, as the Dow gave back 1,000 points in 2 days! The market came back up on Friday, but, still closed below the 10-day MA.
SPX
SPX added +16.11 points to close at 930.99. It closed just below the 10-day MA. The MACD was flat.
Nasdaq
Nasdaq gained +38.7 points to close at 1647.4. It closed just below the 1650 leve. The MACD was higher slightly.
Both SPX and Nasdaq closed just below their respective 10-day MAs, although the 10-day MAs turned up. For the new week, the danger of retesting the lows (SPX 850; Nasdaq 1500) is still there. How the market opens the week will be very important. If the market goes back up above the 20-day MA early in the week, it may just have enough momentum to push above the 30-day MA. It will likely need to do this with 1 or 2 consecutive strong days. But, if the market goes below the support levels (SPX 900; Nasdaq 1600), we will likely see the lows tested.
Sector Watch
UUP (dollar)
UUP kept things strong all week. It still closed above the daily MAs. This chart is still looking bullish and still could re-test the resistance between $27-$28.
USO (oil)
On the other hand, USO is still looking weak, barely closing above $50. A new leg down could push USO to $45 before finding support. We'll have to watch the $50 level carefully.
GLD (gold)
GLD is struggling in the range between $70-$75. It closed below the 10-day MA, but, the MACD is trying to established a bullish crossover. The chart is still bearish; it'll need to get above $75 to start turning the MAs up.
XLE (energy)
We have not looked at XLE for a while. But, this week XLE had some bullish developments. It tried hard to break above the 30-day MA. But, like the broader market, it was denied. However, on Friday, it closed above the 10 and 20-day MAs, after coming down to test them on Thursday. The 10-day MA has also crossed above the 20-day MA. I will start watching this sector with interest. XLE's top holdings did really well on Friday. XOM and HES were very strong.
FXI (Chinese ADRs)
FXI was also fairly strong last week. After testing the 10-day MA on Thursday, it successfully bounced back to closed above. The 30-day MA is within reach. Going above the 30-day MA, the nearest resistance is at $30.
Hope you've had a restful weekend.
Good night and HappyTrading! ™
