Last Friday, when the market was down big, we cashed out our positions with solid gains (Click here to see last week's trades) and stayed in cash. In the Trading Room, I told our members to be patient and start to look at June calls:
May 15, 2009 10:17 AM
GS
coming back up; still showing possible breakout next week.
May 15, 2009 10:22 AM
market
no hurry to act just yet; be a little more patient...
May 15, 2009 11:54 AM
VIX
hourly chart now maxed out...
GS
looking at June calls.
May 15, 2009 12:09 PM
CME
getting tasty again for next week...
Today, the market was strong from the open. GS, indeed broke out and added $8.75, or +6.51%, closing at $143.15!! We already locked in good profits on GS today. The rally today was broadly based. Financials and techs led the rally. Energy and commodity sectors also participated. The Dow was up +235.44 points; SPX gained +26.83 points; Nasdaq jumped +52.22 points:
Both XLF (financials) and HGX (housing) added about +6.6%. Techs rebounded with SOXX (semiconductors) up +3.71%. XME (metals and mining) gained +6.11%. USO (oil) rose +4.5% while OIH (oil services) bounced +4.79%. GLD (gold) and SLV (silver) were both weak. FXI (Chinese ADRs) advanced +5.88%.
SPX
SPX gained +26.83 points to close at 909.71, back above the 900 level. It also closed above its 10-day MA. The MACD flattened.
Nasdaq
Nasdaq jumped +52.22 points to close at 1732.36, above the 1700 level and above its 10-day MA. The MACD was flat.
Last week, while the rest of the market was on the weak side, we focused on the agriculture sector as discussed in our Sector Watch the weekend before, and profitted from the sector's strength. After cashing out on solid gains, we waited patiently and did not jump to the short side, although the market was sliding. When things are unclear, sometimes it is best to stay in cash and not to act too hastily. It paid off today, as we were free to act when the market rallied. This morning, in the Trading Room, I said:
May 18, 2009 8:03 AM
VIX
going to be in the 20s soon...
SKF
almost new leg down.
VIX barely closed above 30 today. SKF was down more than 12%
I also said:
May 18, 2009 9:21 AM
market
getting ready for bigger moves up; waiting on GOOG. closing above SPX 900 would be very bullish today.
GOOG did finally make some gains, up $6.84 for the day, and SPX closed above 900 at nearly 910. For this week, with SPX and Nasdaq back above their key levels (SPX 900 and Nasdaq 1700), things are looking bullish again! Most sectors participated in today's rally, which is a good sign. With VIX heading back into the 20s, this rally looks to have more legs to run higher. Let's take a look at the sectors:
Sector Watch
XLF (financials)
XLF was very strong today, closing above its 10-day MA. It still needs to break that resistance at $13 to go higher. It's good to see GS closing above $140 and leading the charge. Insurance companies found renewed strength as they became recipients of the TARP money. MET, PRU, and ALL are all doing well.
USO (oil)
USO once again closed above the resistance at $32.5. Its daily chart is showing a new bullish formation. This run could bring USO to test $35.
XME (metals and mining)
XME also rebounded after last week's profit-taking. Coals are especially strong. CNX, MEE, BTU, ACI were all up today.
FXI (Chinese ADRs)
FXI gained +5.88% today. Its daily upper BB is opening up again and the bullish formation in its daily MAs are intact. This bodes well for another breakout! A lot of funds are rotating money into Asian markets, so, we'll pay attention to these Chinese ADRs. ACH jumped more than +10% today. SOHU and SNDA are seeing renewed strength. BIDU could test $260 once again.
Good night and HappyTrading! ™
