Last weekend, in my Market Forecast, I said,
"For the new week, most sectors seem to have sync'd up to go higher. SPX closed right at its 10-day MA while Nasdaq closed above. Another solid green day, the indices could have the daily upper BB within their reach. The market will need to push the daily upper BB up in order to go another leg higher. For SPX it is at about 1040, and Nasdaq will need to break above 2050."
Once again, the market pretty much did as forecasted. SPX closed the week at 1042.73, just 2.73 points above the 1040 level, and Nasdaq broke above 2050. On Tuesday, the market rallied higher on commodities and techs. On Wednesday, techs continued to push the market higher and the financials strengthened. On Thursday, the commodity sectors drew more buyers in and helped the market indices to establish new 2009 highs. On Friday, the market was strong in the morning, but, closed slightly in the red as investors locked in profits after 5 days of rally.
For the week, the Dow added +164.14 points; SPX gained +26.33 points; Nasdaq jumped +62.12 points. At the time of this writing, Asian markets were mostly lower. Japan was especially weak on its exporters being hurt by strong Yen. Hong Kong and Taiwan were seeing some profit-taking after another strong week. China was in the green. Both oil and gold were down slightly. Let's see where the US market stands after Friday's close:
SPX
On Friday, SPX sled 1.41 points to close at 1042.73. It managed to stay above 1040. The MACD went higher.
Nasdaq
Nasdaq slipped 3.12 points to close at 2080.9. Its daily MAs and MACD went up.
For both SPX and Nasdaq, the daily MAs and MACD have turned higher. The MACD is now showing a new "bullish" crossover. Nasdaq has cleared the resistance at 2050, while SPX is testing the 1040 level. More economic data came in last week and supported the case of the economic recovery being on its way. VIX fell below 25 and tested 23. The 23 level did hold up last week. After rallying for 5 straight days, the market finally took a breather on Friday. For the new week, Monday may be a bit shaky, as the market needs to let off some more steam. But, as long as the market does not fall too far below the daily upper BB, it should stay strong. SPX 1030 and Nasdaq 2050 will be the immediate support levels. If the market sticks close to the daily upper BB, we should see the market push higher later in the week. Nasdaq can easily push above 2100. SPX could be on its way to 1100 (but, will need the commodity sectors to stay strong to get there). Oil is looking a bit weak. So, we'll have to watch the energy sectors carefully.
Sector Watch
UUP (dollar)
UUP continues to look weak. A new bearish formation was established last week. We might see a bit of a bounce here, but, the chart still points to lower grounds for UUP. $22.5 is a support.
USO (oil)
USO took a sizable dip on Friday and is again looking weak. A bit of mixed signals from USO as UUP is also bearish. USO is now showing a new "bearish" formation. My thinking here is that global governments cannot affort for oil prices to shoot higher just yet. They need to ensure that the global economies get some momentum built up into the recovery. Also, more and more attention (and funding) is being paid to alternative energies. Nevertheless, when oil is weak, we have to watch the energy sectors more carefully. I think the oil is going to be range-bound. Presently USO has a support at $35 and a resistance at about $38.5 to $39.
GLD (gold)
GLD pushed higher last week and gold closed above $1000/ounce. The $97.5 level should now become a support for GLD, if any quick profit-taking happens. GLD still looks strong. AEM and PAAS may need a little rest. GOLD still seems to have a lot of room to go higher.
XME (metals and mining)
XME was very strong last week. It cleared the former resistance at $43 and never looked back. FCX closed above $70 and still looks strong. CLF led the coals higher; ACI was also very strong.
SWH (software)
SWH had a "huge" week last week, breaking above $39! MSFT has been strong, but, will need to break above $25 to go higher. Click here to see the top 10 holding of SWH. ADBE looks interesting with its recent break out. ORCL is reporting on Wednesday, after the market close.
Good night and HappyTrading! ™
