Last weekend, in my Market Forecast, I wrote:
"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)."
Again, things happened pretty much as forecasted. Nasdaq finished the week above 2100 and SPX closed near 1070, on its way to 1100. On Monday, the market was shaky and showed weakness in the morning. But, it climbed the rest of the day and was able to close in the green. On Tuesday, commodity sectors jumped again and led the market higher; we cashed out profits on our CNX play. On Wednesday, most sectors joined in on the rally, including the financials. On Thursday, the market took a slight breather. On Friday, the market was a bit hesitant as managed to close higher again, as we wrapped up another week with solid wins.
For the week, the Dow was up +214.79 points; SPX added +25.57 points; Nasdaq gained +51.96 points. Gold closed above $1000/ounce and oil finished above $70/barrel. This evening, Asian markets are mixed at the time of this writing. Let's see where the US market stands after Friday's close:
SPX
SPX added +2.81 points to close at 1068.3. Its daily MAs and MACD were higher.
Nasdaq
Nasdaq gained +6.11 points to close at 2132.86. Its daily MAs and MACD went higher.
Both SPX and Nasdaq climbed higher along their respective daily upper BBs. Their daily MAs and MACD glided up. VIX, however, tested the support at 23 all week and would not break down. It closed at 23.92 on Friday. For the new week, we might see some sideways trading to start the week. Miners may need to let off some more steam, although some other sectors are just starting to show breakout signs. SPX has support at 1060 and Nasdaq needs to stay above 2120. Again, we'll need to see both indices stick close to their daily upper BB to keep this rally going. 2200 is Nasdaq's next resistance and for SPX, it is 1100. GS closed above $180 last week, but, the other big 3 (WFC, BAC, and JPM) were not as strong. Let's see how the financials look as a sector.
Sector Watch
XLF (financials)
XLF had a strong week, finally closing above $15. GS led the charge and went almost $10 higher last week. This week, this sector will likely need to see some new leadership. JPM, WFC, and BAC will need to take the baton from GS. So, let's keep our eyes on these 3.
XME (metals and mining)
Both the steels and the coals broke out in a big way last week. They stuttered at the end of the week as profit-taking kicked in. I don't think these are done going up, although they may need some more breathing room. ACI, BTU, CLF, CNX, MEE, and X, NUE, AKS are among the favorite plays in coals and steels. Gold and silver seem to also need a little more rest.
UUP (dollar)
UUP lost more grounds last week, although it experienced a bounce on Friday. $22.8 is its nearest resistance. A breakdown below $22.65 should induce a new leg down. We'll be watching the dollar as commodity sectors take their breather.
USO (oil)
USO had a good week last week and closed above its daily MAs. It was still under the resistance at $38.5. However, its MACD is showing a new bullish crossover. Energy sectors showed renewed strength as oil services charged higher. We'll be watching the components in XLE to point the way for the energy sectors this week. APA, XTO, DVN and XTO are among the favorites.
MOO (agriculture)
MOO did much better last week, finally breaking above $40. But, after the market on Friday, POT lowered its profit estimates again! POT shares traded 3.91% lower in after-hours on Friday. This could provide a good clue as to how desparate the sidelined money is. We have seen new money pouring into the markets just trying to find pullbacks to get in. The fertilizers should open lower on Monday. It'll be interesting to see if buyers will still come in and buy the agriculture stocks on this pullback. Before POT's announcement, it was on its way to break out higher; so was MOS. MON and BG still looked weak.
We'll be a little more careful on the long side this week as miners and oil services may need to let off some more steam. If VIX breaks below 23, it'll be a good signal for the market to rally another leg higher. We'll have to be cautious if VIX breaks above 25.
Good night and HappyTrading! ™
