Last weekend, in my Market Forecast, I wrote:
"For the new week, I think the recent consolidation has been healthy. The market will start the new week in a bit more vulnerable position. With VIX above 22, it can easily test 23 to 24 area. If SPX 1080 and Nasdaq 2150 can hold, we could see the market bounce to test SPX 1100 again; if not, the 20-day and 30-day MAs could be tested. On the upper end, the story is still the same. The market will need to break SPX 1100 to go higher. Financials, energies, and the miners lost some grounds last week, and, will be among the key sectors to watch....
Some major sectors are barely hanging on to their support levels. We'll need to see some positive earnings reports for those levels to hold. So, be more careful in the new week."
Earnings in the commodity sectors, especially the energies and oils, turned out to be weaker than expected. On Monday, the dollar showed strength and the commodity sectors started to slide. But, the market did its best to hold SPX 1080 and Nasdaq 2150. On Tuesday, the market broke below those support levels, and, the market tone became much more cautious. On Wednesday, commodity sectors added to their downward momentum. On Thursday, the GDP report showed some promise for the US economic recovery, and the market bounced. On Friday, the sellers returned and the market closed below some major support levels.
For the week, the market ended lower, losing majority of the points on Friday. The Dow ended down 254.45 points; SPX fell 43.41 points; Nasdaq dropped 109.36 points. The Dow did finish the month flat while SPX and Nasdaq lost some grounds. The dollar has risen from the lows. Oil and gold slid a bit. At the time of this writing, Asian markets were on the weaker side, but, had bounced from earlier lows. Let's see how SPX and Nasdaq look after Friday's close:
SPX
SPX tumbled 29.92 points to close at 1036.19. It closed below the 1040 level. The MACD continued lower.
Nasdaq
Nasdaq sank 52.44 points to close at 2045.11, below the 2050 level. The MACD curved down.
Both SPX and Nasdaq closed below their daily MAs. What's worse is that they closed below major support levels: SPX 1050 and Nasdaq 2100. Nasdaq is even weaker, closing a notch lower, below 2050, the September low. For the new week...
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