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Happy Holidays Everyone!
The market ended a busy week with little changes. Last weekend, in my Market Forecast, I said:
"...the market needs to jump higher right from the start to keep things above that 30-day MA. Any weakness to start the week would likely push the 30-day MA lower. Commodity-related sectors resumed their bounce last week. We'll see if they can continue to rally to help push the market higher. Techs showed surprising strength on Friday, especially the semiconductors. We'll also keep an eye on the chip makers."
The market was indecisive on Monday, but, rallied on Tuesday with Fed's help. The market managed to stay above the 10-day MA. For the rest of the week, the market just treaded water and traded sideways. Commodity-related sectors were mixed, as oil dropped lower. We did see the techs stronger, which rendered the overall market mixed and little changed. We took the chance to lock in some profits on Wednesday and chilled for the rest of the week. The market ended the week with the Dow down 50.57 points, SPX adding +8.15 points, and Nasdaq gaining +23.6 points:
SPX
On Friday, SPX eked out a small gain to close at 887.88. It closed at its 10-day MA. The MACD was flat.
Nasdaq
Nasdaq added +11.95 points to close at 1564.32. It closed just above its 10-day MA. The MACD was higher slightly.
While the indices ended the week little changed, SPX has quietly started forming a new "bullish" formation. Its 20-day MA has curved up and crossed above the 30-day MA. Nasdaq looks to be ready to draw a similar configuration. For the new week, I think techs can start leading the market. We'll be looking for the semiconductors and the biotechs for clues. With the bullish formation being established in the market indices, we could see the market bring on a "Santa Rally"! Of course, we'll need to see the financials participate. Metals and miners (XME) should also be important components.
Sector Watch
UUP (dollar)
UUP went down to test $24 this week and bounced back to that $24.75 (see last week's chart). Its daily daily MAs are deeper into the newly formed bearish formation. UUP should test $24 again. Below $24, the next support is at $23.5.
GLD (gold)
Last weekend, we said that GLD is ready to go higher. It pushed to almost $87 from just above $80. It cooled off quickly and ended at $82.63. The daily chart is still strong. GLD should go higher to test that resistance at $88.
USO (oil)
OPEC's cut it oil production gave no apparent support to the oil prices. If anything, USO got weaker! However, the 10-day MA has flattened. USO will need to test $35 before going higher. Even if it gets above $35, anything below $45 will still render a bearish chart for USO!
XME (metals and mining)
XME managed a small gain. It is displaying a newly established bullish formation. This group should push higher to test the $30 level again.
SOXX (semiconductors)
SOXX tested 220 this past week. It managed to stay above the daily MAs and a new bullish-phase is about to be formed. We'll need to see continued strength in the semiconductors to help the market turn the corner and establish a bottom.
Remember this is the Christmas week. Wednesday is a half-day and the market is closed on Thursday.
Happy Holidays! Hope everyone gets lots of nice gifts!! I'll be on holiday mode for the last 2 weeks of the year. I may not have market updates everyday, but, I'll be around.
Good night and HappyTrading! ™
