Last weekend, in my Market Forecast, I wrote:
"For the new week, the market is in danger of breaking down into a "correction". Besides more earnings reports, FOMC meeting is on Wednesday and the Senate will determine whether Bernanke gets to keep his seat as Fed's Chairman. The week will likely be volatile, especially the beginning. Before the week even begin, AKS reports on Monday morning, which could move the miners. Miners have some downward momentum right now, so, the report will have to be overwhelmingly positive to get positive reactions. Monday after the market, we'll hear from AAPL and TXN with their earnings. On Tuesday, we'll likely be dealing with reactions to AAPL and TXN earnings, which then, takes us right into the FOMC meeting. It's going to be a crazy week as bulls and bears fight it out to establish the next direction. SPX will have to hold the 1100 level to hold the bullish trend, and Nasdaq needs to hold the 2200 level. Below these, we're looking at SPX 1080 and Nasdaq 2150 as the nearest support."
I also added,
"Be very careful this week, with VIX back above 25, things are bound to be volatile. Vix may need to come back down of Monday, after jumping 10 points in the past 3 session. I'll be looking for some quick bounces on Monday. But, before the FOMC meeting and the confirmation of Bernanke's next term, buyers will probably be shy to stay in. So, we'll have to stay nimble and will not be shy to play puts if the downward momentum picks up."
Indeed, the market was very volatile and the momentum stayed on the downside. VIX did come down on Monday and the market had a small bounce. But, on Tuesday, the market got weak again. On Wednesday, the market was still volatile, although it eked out a win after Fed kept rates unchanged. SPX was not able to close above the 1100 level. On Thursday, SPX sank down to test that 1080 support. On Friday, the GDP report was better-than-expected. However, market's strength in the morning quickly faded and turned into a selloff in the afternoon, ending the week with SPX and Nasdaq just below their support levels.
For the week, the Dow was down 105.65 points; SPX lost 17.89 points; Nasdaq fell 57.94 points. Both gold and oil continued to fall lower as the dollar rose. At the time of this writing, Asian markets were really weak and pushing below their support levels. Gold and oil were also down. Here's how the US market looks after Friday's close:
SPX
On Friday, SPX dropped 10.66 points to close at 1073.87, below the 1080 level. The MACD and daily MAs curved down.
Nasdaq
Nasdaq lost 31.65 points to close at 2147.35, below the 2150 level. Its daily MAs and MACD also went lower.
Both SPX and Nasdaq closed just below their respective support levels. VIX is hanging just below 25, which shows nervousness on the market. Dollar kept on rising and exerting more pressures on commodity sectors. Not even a solid GDP report could cheer the market up. For the new week...
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