Last weekend, in my Market Forecast, I wrote:
"For the new week, the market certainly has room to rise. But, it'll have to break above SPX 1120 to go higher. The market is very "emotional" right now, and, the weekly jobless claims reports seem to keep the market on its toes. (What they really should do is to change the jobless claims reports to at least bi-weekly. A bi-weekly average may actually be more accurate and get rid of some "noises" in the numbers. Further, it may help to calm the nerves of the financials markets.) The dollar has risen quite far since its recent low in early December. It is starting to waver at a 7-month high. If the dollar pulls back, commodity sectors should bounce a bit more. Both oil and gold seem to be ready to go higher. We may see a strong opening for the week; but, if SPX 1120 cannot be broken, we are still range-bound. Techs look stronger than the broader market and should do well in a bullish environment."
In the Sector Watch, I also added,
"...XLF showed a lot of strength. The $15 level is the next resistance. Breaking above $15 would be quite a feat."
The market did indeed open the week on a strong note on M&A deals. For the next three days, the market traded in a tight range, with various sectors taking turns to keep the market's altitude. On Tuesday, miners rallied as gold pushed higher, along with more acquisition news in the fertilizer producers. On Wednesday, the market continued to struggle with SPX 1120. However, techs kept the Nasdaq in the green. On Thursday, the market managed to close above SPX 1120 just ahead of the jobs report. Wouldn't you know it, on Friday, the jobs report came in "less badly" than many economists had expected. Since SPX was already above 1120, the whole market rallied higher! Financials really had a strong week and helped carry to market. XLF closed above $15. Techs kept its pace ahead of the broader market, with Nasdaq gaining back all of its recent loss in January and February.
We also had a decent week, with 100% of the the closed trades in the green:
March 04, 2010
09:32 | HappyTrading GS ($162.70) Sold to Close 03C160 Mar 160 calls, at $5.00 +11%
06:53 | HappyTrading GOOG ($551.20) Sold to Close 03C550 Mar 550 calls, at $9.00 +43%
March 03, 2010
07:56 | HappyTrading HGSI ($31.25) Sold to Close 04C29 Apr 29 calls, at $3.30 +50%
March 02, 2010
07:22 | HappyTrading HGSI ($30.70) Sold to Close 04C29 Apr 29 calls, at $3.00 +36%
March 01, 2010
12:41 | HappyTrading GOLD ($74.20) Sold to Close 03C70 Mar 70 calls, at $5.11 +31%
12:13 | HappyTrading AMZN ($124.05) Sold to Close 03C120 Mar 120 calls, at $6.15 +32%
09:48 | HappyTrading AMZN ($122.20) Sold to Close 03C120 Mar 120 calls, at $4.75 +2%
07:26 | HappyTrading GLD ($109.30) Sold to Close 03C108 Mar 108 calls, at $2.65 +28%
For the week, the Dow was up +240.94 points; SPX added +34.21 points; Nasdaq gained +88.09. Both gold and oil went higher. This evening, at the time of this writing, Asian markets were following the US higher. Let's see how the US market looks after Friday's close:
SPX
SPX added +15.73 points to close at 1138.70. It closed above the 1130 level. Its daily MAs and MACD went higher.
Nasdaq
Nasdaq gained +34.04 points to close at 2326.35, above the 2300 level. Its daily MAs and MACD were up.
SPX finally went back above the 1120 level. VIX closed below 18. Nasdaq did even better, achieving a new closing high for 2010! For the new week, both SPX and Nasdaq are showing a new bullish formation in their respective daily MAs. Nasdaq is basically at the resistance set back in January, 2325. SPX's next resistance is at 1150. Above these resistance level, the market could break out to a new leg higher. We many see a Monday follow-through rally for the US market. But, the market has gone quite far, so it may need a breather through the mid-week. If the market can hold its altitude while letting off some steam, we could see the market push higher by the end of the week. Again, techs should be strong in a bullish environment. Financials and miners will be very important to watch. The financial sector is on the verge of breaking out and could help determine whether the broader market itself can push higher. The coal stocks have been very strong and are giving the whole mining sector a bullish tone.
Sector Watch
XLF (financials)
We discussed the $15 level last week, and XLF was able to close above. It is now showing a new bullish formation. $15.4 level is the next resistance, above which we could really see the bank stocks run! GS is still the leading indicator. But, many mid-size regional banks could become takeover targets. We'll start watching for M&A activities in this sector. Also, if the financials sector takes off, BAC should have a lot of distance to cover.
GLD (gold)
Last week, I said that GLD was on its way to test $112. It did. However, it could not break through just yet. With better economic data, gold price pulled back a bit. GLD is now showing a new bullish formation. It looks like GLD could take some stutter steps and trade sideways for a bit. But, once it breaks above $112, it is off to the races!
USO (oil)
USO showed some strength last week. It tested its 10-day MA and held the support. Now, it's on its way back up again. $41 level is the next resistance. Breaking above $41 could easily bring it to $50. We should start watching the oil service stocks also. RIG, DO, SLB, and NOV have all come down quite a bit.
XME (metals and mining)
XME broke and closed above $56 last week. The daily chart is really strong with a newly formed bullish phase. Coals and steels are pushing this sector higher. M&A rumors are starting to surface in this sector. AKS has already been rumored to be a takeover target. Reports that a Japanese steel maker is willing to pay higher prices for coking coals are driving the coal stocks higher. MEE, BTU, WLT, CNX, ACI, PCX have all been very strong.
Good night and HappyTrading! ™
