Last weekend, in my Market Forecast, I wrote:
"For the new week, the market still looks very vulnerable. The market would have to overcome a lot of downside pressure to push higher. Goldman Sach's (GS) earnings on Tuesday morning could decide the market's near-term fate."
Indeed, GS earings turned out to a dominant force. On Monday, stocks jumped as an analysts upgraded GS, and the market tone started to shift towards more bullish. We cashed out our puts on POT at a good profit and started our bullish plays. On Tuesday, both GS and INTC delivered good earnings and the market continued higher. We cashed out winnings on BIDU for a +120% profit. On Wednesday, things just kept going up, and we locked in more profits. On Thursday, both GOOG and IBM beat earnings estimates. Although GOOG slid lower, the overall market stayed strong. Friday was options expiration day. Things fluctuated, but, were mostly flat. IBM soared almost $5 to close above $115. We ended a very nice week with 100% of our published trades closing in profits.
For the week, the Dow was up +621.84 points; SPX added +61.25 points; Nasdaq jumped +130.58 points. Just a week ago, the market looked like it was going to turn down. But, with bellwether companies beating earnings estimates, the market has turned bullish once again! Both SPX and Nasdaq are testing the high end of their respective, recent, trading ranges, with Nasdaq closing just above its recent high. Financials and techs sparked the market's engines. Commodity-related sectors, especially miners, also bounced. Let's see how the market looks after Friday's close:
SPX
On Friday, SPX slid just 0.36 points to close at 940.38. Its 10-day and 20-day MAs curved up. The MACD was also higher.
Nasdaq
Nasdaq added +1.58 points to close at 1888.61. Its daily MAs and MACD went higher.
After charging up, basically, 5 days straight, the broader market now carries a bullish tone. Of course, earnings season has just started and we still have to get through a lot of quarter results. Asian markets this evening are trading flat to mostly higher. For the new week, a new leg up may finally start as the market indices penetrate above the recent trading ranges. SPX 950 is still the key level to break. The market is toppy and may need to trade sideways to slightly slower on Monday. After the market on Monday, TXN reports. On Tuesday, we have both AAPL and YHOO reporting in after-hours. These should help to decide whether the market can push beyond the recent trading ranges. If these earnings are as good as what IBM and INTC had already demonstrated, we could see SPX testing 1,000 and Nasdaq testing 2,000 soon!
Sector Watch
USO (oil)
USO bounced off of the support at $32 and closed above $34. Although its daily chart is still on the bearish side, it is certainly accumulating some upwards momentum. It's next resistance is at $35.
XLE (energy)
XLE bounced as oil and natural gas traded higher. It is just under its 30-day MA. Its 10-day MA had already turned up. We can also see a new bullish crossover in its MACD. APA, DVN, XTO were very strong last week. HAL reports on Monday morning and could move the sector again.
XME (metals and mining)
XME was very strong last week, almost more so than financials and techs! It jumped all the way above its daily MAs. Its 10-day MA had also turned up. Gold, copper, and coal miners all charged higher. FCX jumped almost $9 for the week!
XLF (financials)
XLF closed above $12. It is showing a new bullish crossover in its MACD. It'll need to break that resistance at $13 to really make a difference on the broader market. BLK is reporting on Tuesday morning; WFC and MS are both on Wednesday morning.
PBW (clean energy)
PBW has retreated with the other energy sectors and has not come back as much. Both FSLR and SPWRA gave muted responses last week as the energy sectors bounced. SPWRA is reporting on Thursday and we shall see if this sector can finally kick into gears.
Good night and HappyTrading! ™
