Last weekend, in my Market Forecast, I wrote:
"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."
As usual, the market behaved according to the forecast. On Monday, the market jumped and gold recorded another new high. We locked in on some big gains. On Tuesday, the market treaded water as financials still lacked strength. On Wednesday, gold went above $1190/ounce and SPX tested 1110, but remained range-bound. On Wednesday night, news on Dubai's crisis hit the world markets. The US market was closed on Thursday for Thanksgiving. On Friday, the US market gapped lower at the open, but, managed to climb higher all day and SPX closed just above 1090. We finished a very strong month of trading (see published trades).
For the week, the Dow was down 8.24 points; SPX added +0.11 points; Nasdaq lost 7.6 points. Gold was strong all week, until Friday's minor pullback. Oil fell lower, trading around $76/barrel. This evening, at the time of this writing, gold was flat and crude climbed higher. Asian markets were bouncing strongly from last week's big drop on Dubai. Let's see how the US market looks after Friday's close:
SPX
SPX lost 19.14 points to close at 1091.49. it clsoed below its 10-day MA. The MACD was lower.
Nasdaq
Nasdaq fell 37.61 points to close at 2138.44. It closed at where its 30-day and 20-day MAs met. Its MACD slid.
Both SPX and Nasdaq were rising back above their daily MAs, until Friday when the Dubai news spooked the market. VIX jumped to test 26 on Friday and closed just below 25. However, SPX's daily MAs have just developed into a new bullish formation! There are still some mixed signals. For the new week, although the market pulled back on Friday, it held up exceptionally well comparing to other markets. Gold is holding its ground this evening after another big win last week. Asian markets are mostly higher. We could get another "mutual fund Monday" buying to start the week. We still need to see strength in the financials for this market to break above its recent trading range. Black Friday shopping results are moderately positive, so, we'll see if the retailers can respond positively on Monday. On Friday, we'll get December's unemployment numbers. The market may stay range-bound until then. On the top, SPX 1110 and Nasdaq 2200 still remain as the resistance levels; on the bottom, the immediate supports are the daily MAs.
Sector Watch
XLF (financials)
XLF took a dive on Friday, but, managed to close above $14. This level is critical. Its daily MAs are sloping down and will need to see some bounces right away to prevent a bearish formation from becoming. GS has been really weak, but, trading at below $165 may attract some buyers back in. Credit card stocks are still strong, and, if the retailers rally on holiday shopping, these should do well.
OIH (oil services)
OIH tried to bounce last week, but, got pulled back on Friday. It bounced off the support at $116. The daily MAs are slipping into a new bearish formation. USO (oil) also lost grounds last week. We'll watch these carefully.
XME (metals and mining)
XME managed to keep a small gain last week. Its daily MAs are showing a new bullish formation. The MACD is still positive. Thanks in part to the rising gold (and copper), this sector is holding up well. CLF, FCX, MEE are still among the favorite plays.
GLD (gold)
GLD finished right at our target $115. It did shoot up to almost $117 on momentum. It closed at its 10-day MA. It is toppy, but, the momentum is still keeping it up. It may need to trade sideways this week to let off some steam. It'll be interesting to see if the miners can rally while gold stays flat.
Good night and HappyTrading! ™
