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Last weekend, in my Market Forecast, I wrote,
"The market is in a very defensive position and could easily head lower to test the bottom. For the new week, we'll need to pay very close attention to the financials, as recent new developments (for example, C and BAC) have rekindled worries in this sector. SPX and Nasdaq are barely hanging on to their respective support levels (SPX 850; Nasdaq 1500). Any weakness could push the daily MAs to form new bearish formations."
Indeed, the financials dictated the market movements this week. It was a short week (Monday was a holiday). On Tuesday and Thursday, the financials were weak, and so was the market. On Wednesday, we saw the financials bounce, and so did the market. On Friday, the financials were weak to start with, but, gained strength in the afternoon; the market, again, mirrored that motion. Overall, the market did have another losing week and the daily MAs did form new bearish formations.
We fortunately did pretty well, playing on both sides of the fence. You can see last week's trades in Friday's post.
For the week, the Dow was down 203.66 points; SPX lost 18.17 points; Nasdaq fell 52.04 points. Let's take a look at how the market closed on Friday last week:
SPX
SPX added +4.45 points to close at 831.95. Its daily MAs and MACD slid.
Nasdaq
Nasdaq gained +11.8 points to close at 1477.29. Nasdaq tried testing the 1500 level, but, was not able to close above it. The MACD slipped.
The market is trying very hard to fight the downward pressure, now that the new bearish formations have formed. Both SPX and Nasdaq are showing new bearish formations in their daily MAs. For the new week, the danger of sliding deeper into the new bearish formation is definitely there...
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