Last weekend, in my Market Forecast, I wrote,
"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."
Once again, things happened pretty much as forecasted. On Monday, the market did get a strong open and the market closed above SPX 1100. We locked in on some good profits. Both the energy and financial sectors participated in the rally. VIX closed below 23. On Tuesday, the broader market traded flat, but, coal and agriculture stocks rallied higher. On Wednesday, gold continued to push higher and we cashed out the rest of our December GLD calls. However, on Thursday, the chip sector was downgraded and led the market lower. DELL missed its earnings estimates after the market. Both the financial and energy sectors turned weak. On Friday (see Weekly Wrap of our published trades), the financials and techs stayed weak and the market retreated to close below SPX 1100.
For the week, the Dow was up +47.69 points (!!); SPX slid 2.1 points; Nasdaq fell 21.84 points. The dollar bounced a bit, although gold continued to make new highs closing above $1150/ounce. Oil was slightly on the green side. This evening, at the time of this writing, gold was trading higher again, above $1160/ounce! Asian markets were mostly higher. Let's see where the US market stands after Friday's close:
SPX
On Friday, SPX slid 3.52 points to close at 1091.38. It closed below its 10-day MA. The daily MAs went up, but, the MACD was down.
Nasdaq
Nasdaq fell 10.78 points to close at 2146.04. It bounced off of its 30-day MA. The MACD dropped lower.
The market retreated rather quickly at the end of the week, closing below the 10-day MA. Both SPX and Nasdaq once again closed below the recent resistance levels (SPX 1100; Nasdaq 2190 to 2200). The MACDs turned lower. However, VIX closed below 23. We have some mixed signals, a sign of consolidation, as I pointed out last Thursday. For the new week, we have to be very careful. With gold trading higher again this evening, we could get another so-called "mutual fund Monday" buying to start the week. But, unless the market can jump back to close above the recent resistance levels, it may be stuck in a range. On the support side, we'll need to pay attention to the daily MAs. If the market closes below the daily MAs, it would be hard to make a bullish case. We have some housing data on Monday, then, GDP and consumer confidence on Tuesday. These could be potential market movers, especially ahead of Black Friday. Financials have been on the weak side, and, we'll need to see renewed strength in them for the market to push back above SPX 1100.
Sector Watch
XLF (financials)
Last week, XLF tested the resistance at $15 and quickly retreated back to the middle of its trading range. It closed just above its 20-day MA. Closing below the 20-day MA may invite more bear attacks on the financials. GS has been especially weak. On the other hand, BAC has been holding up better than the other big banks. PNC still looks good, if this sector bounces. We'll be watching the financials carefully this week.
GLD (gold)
We talked about gold reaching $1150 and GLD hitting $113 last week. Those objectives were accomplished. This evening, gold is pushing higher, trading above $1160. GLD is getting toppy, but, it has momentum on its side. Looks like it can hit $115 if this evening's rally sticks.
XME (metals and mining)
XME tested $50 but could not close above. It did manage to stay above its daily MAs, partially helped by gold miners. Coal stocks have been strong, especially MEE. Steel stocks are bouncing back. X and AKS are looking better. CLF could be a good play on both coal and steel. Of course, FCX is another favorite to play with exposure in both gold and copper.
OIH (oil services)
OIH was extremely weak. It took out the gains made in the past 2 weeks and came down to test the support at $116. We could see some bounces here as its weekly chart is still strong. But, if it closes below $116, be very careful.
Good night and HappyTrading! ™
