Last weekend, in my Market Forecast, I said,
"For the new week, Monday is going to be a little tricky. After running up for 4 days, the intraday charts are getting toppy. If the market can hang above the 20-day MA (SPX 750; Nasdaq 1400), we might just see the market push this rally higher. We'll need to see if the market can let out some steam without losing altitude. Above the 30-day MA, the resistance levels are at SPX 800 and Nasdaq 1500."
That was pretty much how it went. On Monday, the market opened higher, but, ended lower. It did manage to stay above the 20-day MA. On Tuesday, the market ran higher and, on Wednesday, the market touched the resistance levels that I spoke of: SPX 800 and Nasdaq 1500. However, the market was not able to penetrate those resistance levels just yet, as the market retreated on Thursday. Friday was options expiration day and lots of stocks fluctuated in a tight ranges. But, we finished off the March options in flying colors, actually, mostly GR$$N (see published trades for March)!
Let's see how the market indices look after last week:
SPX
On Friday, SPX lost 15.5 points to close at 768.54. It closed just above its 30-day MA. The MACD flattened a bit.
Nadaq
Nasdaq fell 26.21 points to close at 1457.27. Its 10-day MA went higher. The MACD stayed up also.
The US stock market finally had its first back-to-back weekly win in 6 months! This evening, the Asian markets are solidly higher, perhaps on hopes of the US Treasury's toxic asset plan, which is to be unveiled on Monday. As mentioned earier, both SPX and Nasdaq hit their respective resistances and came back down. But, both managed to stay above the daily MAs. For the new week, it looks like the market intends to go higher. Monday's actions could set a strong tone for the week. But, the market will need to break above SPX 800 and Nasdaq 1500 to go higher. Catching the daily upper BB would bode really well for this rally. VIX bounced back from 40 last week. If VIX turns lower again and breaks below 40, it will break below its 6-month range, which would also be a big plus for the market.
Sector Watch
XLF (financials)
XLF went above $9.5 last week. But, came down to close at just above $8. It also stayed above its 30-day MA. The 10-day MA is about to cross above the 30-day MA. Both the 20- and the 30-day MAs have begun to flatten. XLF is looking a little more bullish now. Breaking above $9 could take it all the way to $13, although there are some soft resistances along the way!
GLD (gold)
GLD bounced off of $88 last Wednesday. It avoided turning the chart into a bearish phase. It is back in neutral gear right now, although many of the gold miners are looking very strong. AEM, ABX, and GOLD are all back at their daily upper BB!
USO (oil)
USO has turned the corner and established a new bullish formation. It is riding its daily upper BB higher. This bodes well for other commodity sectors as well.
XME (metals and mining)
XME took a sharp drop on Friady, but, managed to stay right at its 30-day MA. Its 10-day MA has crossed above the 20-day MA. It is in the process of turning. If it goes higher from here, it should push its daily upper BB open. Gold and copper miners have been strong. Coal stocks are also trying very hard to push higher.
Good night and HappyTrading! ™
