Last weekend, in my Market Forecast, I said,
"For the new week, the market will start the week in a neutral position. If SPX and Nasdaq can rise above their respective daily MAs, the market can rally higher. The immediate resistance levels above the daily MAs are SPX 1080 and Nasdaq 2150. Although VIX closed below 25, we might see a quick test of that level early in the week. If VIX again poses resistance at 25, it'll be a bullish sign for the market. The Dow is actually leading the broader market, and, closing above 10,000, is already carrying a more bullish tone. Financials and semiconductors are still a bit weak, and, will need to see renewed strength in these sectors to help to the market run higher."
Indeed, things pretty much happened as forecasted again. On Monday, the market jumped above the daily MAs, as financials and semiconductors bounced. The Dow led the broader market, hitting a new 2009 high. On Tuesday, the market took a breather and saw minor profit-taking. On Wednesday, the market rallied to test SPX 1100 and we locked in some solid profits. On Thursday, energy sectors were weak and pulled the market back. On Friday, the market regained its footing and finished a winning week on a strong note. We also finished a very nice week with many triple-digit gain winners!
For the week, the Dow added +247.05 points; SPX added +24.18 points; Nasdaq gained +55.44 points. Oil lost some grounds. Gold continued to make new highs. A lot of attention was on the dollar, which fell lower. At the time of this writing, Asian markets were mostly higher. The Chinese market was up more than +2%! Gold traded around $1130/ounce. Let's see how the US market looks after Friday's close.
SPX
SPX added +6.25 points to close at 1093.48. Its daily MAs and MACD went up.
Nasdaq
Nasdaq gained +18.86 points to close at 2167.88. The daily MAs and MACD curved higher.
Both SPX and Nasdaq closed above their respective daily MAs, and the MAs are pointing up again. VIX came down, but, finished above 23. For the new week, a strong move to open the week should push the market above SPX 1100. If the market does close above SPX 1100, we should see a new bullish formation on SPX's daily chart. We should see new buyers rush into the market, if VIX goes below 23 (staying below 23 would invite the buyers to stay). Energy sectors were relatively weak last week and we'll need to see some renewed strength in them to keep the market above SPX 1100. Although financials did make up some grounds, they'll need to be much stronger to help push the market higher.
Sector Watch
GLD (gold)
Investors continued to flock into gold. With the weakening dollar, it appears that the gold will have a strong open again this week. GLD is now in uncharted territory, with little resistance. If the momentum is strong, GLD could run up fast and perhaps reach $113. We could see gold testing $1150 this week.
GDX (gold miners)
GDX pushed higher last week as discussed. It is now above the resistance at $48. It tested $51 on Wednesday, but, could not close above. So, this becomes the nearest resistance. GDX has some room to run. It's all-time high is at $56.87, and, that was with gold just touching $1000 and GLD testing $100. ABX, NEM, RGLD, and GOLD continue to be the favorites. AEM, the once high flyer, was knocked down after earnings and could now see some bounces.
XLF (financials)
XLF made up some grounds last week, but, could not close above the daily MAs. It'll need to break above $15 to go higher. We'll need to see the major financial firms run up to help this sector, ie. WFC, BAC, JPM, and GS. AXP has been ripping higher. But, V, MA, and COF stalled. PNC and BLK are still among the more bullish names in this sector.
XLE (energy)
XLE was basically flat and closed right at the support of the 10-day and 30-day MAs. It'll need to clear $59 to go higher. APA, OXY, and SLB are among the big names to watch. Although XOM and CVX have bigger market caps, these two don't move as much point-wise and are less effective in judging the directional momentum. The energy-related sectors are too important for the SPX, and, we'll need to see these participate in the rallies for SPX to break and stay above 1100.
Good night and HappyTrading! ™
