Last weekend, in my Market Watch, I wrote:
"For the new week, the earnings reports are going to be the driving force. The market has run up for 5 consecutive days and may need to rest and trade sideways to start the week. INTC and ALTR will report after the market on Tuesday. On Wednesday, JPM kicks off earnings for the financials in the morning. On Thursday, bellwether companies such as GS, IBM, and GOOG will report. On Friday, GE, BAC, and HAL will wrap up for the week's earnings. The market seems to be bullish about this earnings season. Financials and techs should be the focus this week, and both are looking strong. To push higher, the market will need to catch the daily upper BBs (SPX 1080; Nasdaq 2150), which happen to be the recent resistance levels. Oil is becoming stronger and gold has room to push higher."
Once again, things pretty much happened as forecasted. As predicted, the market traded sideways on Monday and Tuesday, awaiting for the earnings to come. On Tuesday night, INTC reported surprisingly good earnings and stock futures jumped. On Wednesday, JPM added to the good news and the market was off and running. Both SPX and Nasdaq closed above their respective resistance levels (SPX 1080; Nasdaq 2150). On Thursday, we started to see some profit-taking, but, the energy sectors kept the market higher. After the market, GOOG delivered superb earnings. On Friday, both GE and BAC missed on their earnings estimates while HAL beat. The market saw more profit-taking, but managed to stay above SPX 1080 and Nasdaq 2150.
For the week, the Dow was up +130.94 points; SPX added +16.19 points; Nasdaq gained +17.52 points. Both oil and gold were strong, especially oil. Oil went back above $75/barrel and gold traded above $1050/ounce. The dollar continued to slipped, but again, managed a bounce on Friday. At the time of this writing, Asian markets were mixed. Nikkei (Japan) was seeing weakness while the Taiwanese and Chinese markets pushed higher. Let's see how the US market looks after Friday's close:
SPX
On Friday, SPX slid 8.88 points to close at 1087.68. Its daily MAs and MAcd were higher.
Nasdaq
Nasdaq fell 16.49 points to close at 2156.8. It closed above its daily MAs and above the 1250 level. The MACD flattened.
As mentioned above, both SPX and Nasdaq closed above their recent resistance levels: SPX 1080 and Nasdaq 2150, which can now turn into support levels. Both indices are also showing new bullish formation in their respective daily MAs. VIX has dropped below 22. For the new week, we could see some major advancements in the market by the week's end. The important thing is for the market to keep above SPX 1080 and Nasdaq 2150, while letting off some steam. Techs will see a lot of important earnings: AAPL (Monday), YHOO (Tuesday), EBAY (Wednesday), AMZN (Thursday), and MSFT (Friday). Miners were relatively quiet last week and could be the ones to take the market higher. Financials saw profit-taking and got dragged down by BAC and GE at the end of the week; this sector will need to see some good earnings in the new week to help the market. If the market breaks above SPX 1100, it will have some room to run.
Sector Watch
XME (metals and mining)
XME barely eked out a win last week and basically did not participate much in the market's push to new heights. This week, we have BTU reporting on Tuesday and FCX reporting on Wednesday, and, CNX on Thursday. XME will need to break above that $50 level to go higher.
USO (oil)
Last weekend, we watch the $38.5 level for USO, as I mentioned that "USO can go higher from here to test the resistance at $38.5. This could give the energy stocks some more momentum. Oil services have been really strong." USO went above the $38.5 level and kept on going to close at $40.45. The oil services sector broke higher as well. USO is now trying to establish a new bullish formation in its daily MAs. It may need to trade sideways for a couple of days to let off some steam. If it turns the $40 level to a support, it can run to $45.
GLD (gold)
Although GLD recorded a new high at $104.7, it was not able to finish the week above that $104 level. It did, however, manage to stay above its daily MAs. That $104 is still the level to break.
MOO (agriculture)
MOO made a strong move last week and POT jumped to $97.4. POT is reporting on Thursday. It has lowered its earnings estimates numerous times this quarter. The question is whether it has sufficiently lowered the expectations from the investors. MOO's daily MAs are now curving higher. This sector has been lagging the broader market. We'll need to hear some encouraging words from POT for this sector to run.
SWH (software)
SWH was very strong last week. It has caught up with its daily upper BB and is running higher. MSFT is reporting on Friday and is also shaping up strongly. ORCL, ADBE, and SAP all look pretty decent.
Good night and HappyTrading! ™
