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Market Forecast + Sector Watch: SPX, Nasdaq, XLF, OIH, XLE, SOXX     

Last weekend, in my Market Forecast, I said,

"For the new week, if the market wants to go higher, I think we'll need to see some sectors that have been lagging to pick their pace!  Financials and techs (especially the semis) have been leading this market up.  I think the market's rally is at a point where it might need the lagging sectors to do some catching up to keep the fuel burning.  Monday may be a bit volatile as the market, again, may need to do some breathing.  SPX 850 and Nasdaq 1650 are the nearest resistances; but, these are not hard resistance levels."

Monday was indeed very volatile.  The market dropped lower early, but, came back up in the afternoon, ending nearly flat.  On Tuesday, the selling pressure picked up, as energy sectors were weak.  It was not until Wednesday when the "lagging sectors" drew in buyers and the broader market went green.  On Thursday, good news from WFC inspired a jump in the finacials and most other sectors followed, including the energy sectors.  We were there to catch some good trades in the "Easter Rally"!  The rally was so strong, it took both SPX and Nasdaq above the "soft" resistance levels (SPX 850; Nasdaq 1650) that I mentioned last weekend.

The stock market extended its weekly winning streak to number "5"!  For the week, the Dow added +65.74 points; SPX added +14.06 points; Nasdaq gained +30.67 poins.  The market ended last week on a very strong note.  Let's see where the market stands:

SPX

On Thursday, SPX jumped +31.4 points to close at 856.56, above the 850 level.  The daily MAs and MACD went higher.

Nasdaq

Nasdaq shot up +61.88 points to close at 1652.65, just clearing the 1650 level!  The daily MAs and MACD turned back up!

SKF (financial ultrashort ETF) and SRS (real estate ultrashort ETF) both went higher early last week, but, took a nosedive on Thursday, losing 26.71% and 23.96%, respectively.  VIX jumped on Monday, but slid for the rest of the week, finishing at 36.53, down for the week.  The Asian markets are mixed this evening so far, but, mostly flat.  For the new week, we will get a bulk of earnings coming in, and, it's the options expirations week!  With both SPX and Nasdaq closing above their respective soft resistances, the market looks like it has just started a new leg up!  Financials look especially strong after WFC's good news on Thursday.  GS will report on Tuesday morning, which should be a big market mover.  We also have INTC's report on Tuesday afternoon.  These 2 reports could set the tone for the week.  The market may be a bit hesitant on Monday after the powerful run-up last week.  We'll continue to monitor the energy sectors as they will continue to be important to provide the market with extra fuel to sustain this rally.

Sector Watch

XLF (financials)

XLF broke above $10 last week.  The daily MAs and MACD turned up again!  XLF could go all the way to $13 from here.  There's a soft resistance at $11.5.  We'll have to see how GS reports on Tuesday, but, XLF is looking very bullish!

OIH (oil services)

OIH jumped higher on Thursday, finishing the week up!  It is back above its daily MAs once again.  It'll need to catch its daily upper BB (around $86) to break out of the recent range.  DO, NOV, and RIG performed well last week and could led this sector higher, although the intraday charts on these look a bit toppy...

XLE (energy)

XLE is still lagging the broader market, although it also managed to close higher last week.  This week is very crucial for this sector, as its 10-day MA struggles to stay above the 20-day MA.  Its MACD turned higher again.  CVX did not report well on Thursday afternoon, and, traded lower in AH trading.  We'll see how the sector responds on Monday. 

SOXX (semiconductors)

SOXX pushed higher last week and caught its daily upper BB.  Pushing above 250 is very bullish and could lead it all the way to 300!  INTC's earnings on Tuesday should be a mover for this sector.

Good night and HappyTrading! ™


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