Last weekend, in my Market Forecast, I wrote,
"For the new week, we are seeing mixed signals on the market again, which means the market needs more time to consolidate. With the MACD turning lower, we could see another couple of days of profit-taking in various sectors. It will be important for SPX to hold above 1110. However, oil looks strong and could breakout. We'll have to see how this will affect the energy stocks. Financials almost turned bullish last week, until the quick pullback in the last hour, which kept XLF below the resistance. We'll get the latest unemployment report on Friday, but, I think the market could make up its mind about where to go next before the new jobs data come out."
I also specifically focused the importance on the financial sector by saying,
"I think the XLF could tell the true story next week. Breaking above $14.6 will be the key for the continuation of the market's rally."
The market, again, behaved as forecasted. Financials were very, very strong. On Monday, right out of the gate, XLF closed above that $14.6 level. The financials led the market up throughout the week. Oil did break out higher and the energy stocks made new highs. We made a great trade on WLT, making a +91% gain in 1 day. Stocks stayed strong all week, and, like I said in my forecast, the market made up its mind about where to go before Friday's jobs report. Even though the unemployment report was not favorable, the market pushed higher. As most of our members know, and I mentioned this in last Thursday's article, "Every weekend, I write a Market Forecast & Sector Watch article to "browse" through the market to help our readers manage what to expect from the market in the coming week. I specifically go into sectors and/or "factors" that have the most potential to move the market, whichever way." If you're already following my trades, reading the Market Forecast article before the week starts should help prepare you even better for the trades that I'm looking to make in the coming week.
For the week, the Dow was up +190.14 points; SPX added +29.88 points; Nasdaq gained +48.02 points. Both oil and gold traded higher. Coals and steels were especially strong. As predicted a few weeks back, X topped $60 during the first week of January! The dollar tried to hold its ground, but, fell lower after the jobs report on Friday. This evening, at the time of this writing, Asian markets were mostly higher. Both gold and oil were trading up as well. Let's see how the US market looks after Friday's close:
SPX
SPX added +3.29 points to close at 1144.98. Its daily MAs and MACD moved higher.
Nasdaq
Nasdaq gained +17.12 points to close at 2317.17, above the 2300 level. The MACD was slightly higher.
Nasdaq stalled last week until the late Friday burst, while the financials led the SPX on a steady climb along the daily upper BB. VIX fell sharply to just above 18. For the new week, the market still looks strong, but, will have to be supported by good earnings. Breaking and staying above SPX 1150 could be a psychological blow to the shorts. Steel stocks may have run a bit too far and may need a breather. On Monday, AA will report earnings after the market close, which will likely be a mover for the miners. Gold seemed to be ready for another test of the $1200 level, but, could take more than a week to get there. Financials have come quite far; some sideways trading in the beginning of the week could set up nicely for JPM's earnings on Friday morning. Since the financials and miners led the market up last week, it may be techs' turn to be in the front. We'll be watching INTC's earnings on Thursday after the market.
Sector Watch
GLD (gold)
Last week, GLD closed above its daily MAs. Both 10- and 20-day MAs have turned up. There's a new bullish crossover in the MACD. Pushing above $112 should induce a breakout. Other gold plays such as GOLD and ABX are ready to run also.
USO (oil)
Last week, we talked about the potential of USO going above $40 and turning bullish. It did. Its daily MAs are almost seeing a new bullish formation. The $41 level is being tested, above which should clear the way for $45. Oil services (RIG, DO, SLB) moved up strongly last week and may need a rest soon.
XLF (financials)
XLF closed above $15 last week. Its daily MAs are showing a new bullish formation. GS has led this run. JPM, WFC, and BAC have finally turned bullish. BLK can break out if it goes above $240 again.
BTK (biotechs)
BTK made a new "all-time" high last week. TEVA made a huge jump on Friday and should go higher. CELG looks to be ready to break out. BIIB is also looking really good.
Good night and HappyTrading! ™
