Last weekend, in my Market Forecast, I wrote:
"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!"
Indeed, the market pushed higher and broke above the recent trading range. The market kept its altitude early in the week. On Monday, Tuesday, and Wednesday, stocks pushed SPX above the 950 level, but, were not yet able to break away. AAPL delivered blowout earnings with the best "non-holiday-season" quarter ever, selling more than 5.2 million iPhones! On Thursday, the market jumped on favorable home sales and unemployment numbers, and SPX finally sailed higher. On Friday, the market held up even after disappointing earnings from MSFT.
In our Sector Watch last weekend, we specifically looked at the clean energy sector, PBW, in which we discussed SPWRA and FSLR. SPWRA delivered "surprisingly good" results and saw its shares jump nearly +30%!! FSLR also responded positively. In fact, the whole solar sector charged higher on Friday!
For the week, the Dow finished up +349.3 points; SPX added +38.88 points; and Nasdaq jumped +79.35 points. SPX is now only 20 points away from 1,000! Let's see where the market indices stand after Friday's close:
SPX
On Friday, SPX added +2.97 points to close at 979.26. Its daily MAs are displaying a new bullish formation. The MACD was up.
Nasdaq
Nadsaq slid 7.64 points to close at 1965.96. Is daily MAs are also showing a new bullish formation. The MACD was higher.
The market certainly has broken out of the recent trading range. Both SPX and Nasdaq are showing new bullish formations in their daily MAs. Most Asian markets have also pushed above their recent trading ranges. For the new week, although market still looks strong, it is also toppy. After 2 weeks of rallying, it is starting to look sluggish. SPX 980 is posing some resistance. We could see some profit-taking and consolidation here before testing SPX 1000. SPX 950 now should be a support. As long as the profit-taking does not take the market below SPX 950, the bullish fomations will hold. The market can certainly use a few days of rest to let off some steam. Financials still has not broken out of its recent trading range and could be one of the keys in determine whether the market can take some breathing without losing its altitude.
Sector Watch
GLD (gold)
GLD has been trading flat for about 5 consecutive days. A bigger move should be coming soon. $94 is the resistance to break. Its daily MAs are almost establishing a new bullish formation. If $94 is broken, we should see a new bullish formation, and gold plays such as GOLD, AEM, and ABX will likely push higher.
XME (metals and mining)
XME has been testing the resistance at $40. X is reporting on Tuesday morning and could be the key in determining whether this group can finally break higher.
XLF (financials)
XLF still has not been able to go above the resistance at $13. A new bullish formation is being established in its daily MAs. We'll watch GS for further clues. GS looks strong above $160, and, if it charges higher to test $170, we should see XLF testing $13.
MOO (agriculture)
I'm finding this sector intriguing. Even with POT and MOS delivering horrible numbers, this sector traded higher. This is perhaps because sidelined money is still coming in and trying to find a place to land. MON and BG have remained strong. We could see this sector do some catching up if the market tries to push higher.
Good night and HappyTrading! ™
