Last weekend, in my Market Forecast, I wrote:
"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."
Indeed, things happened as forecast. From Monday through Wednesday, the market treaded water and traded in a tight range. Both techs and financials stayed strong and glided higher. On Thursday, with 2 hours left in trading, the market decided to make a push for SPX 1150. Friday was a quiet day, and SPX closed right at 1150 for the week. On the other hand, Nasdaq crossed above that 2325 and kept on going. We cashed in on many of our trades and finished a solid week, including a +205% winner on GOOG.
For the week, the Dow was only up +58.49 points; SPX added +11.24 points; Nasdaq gained +41.31 points. Commodity sectors were weak. Both gold and oil ended down for the week. However, the dollar was also lower, as euros got a bounce. This evening at the time of this writing, Asian market were mostly down. Gold was slightly up and oil was flat. Let's see how the US markets look after Friday's close:
SPX
On Friday, SPX slid 0.25 points to close at 1149.99. Its daily MAs and MACD went up.
Nasdaq
Nasdaq slipped 0.8 points to close at 2367.66. Its daily MAs and MACD were higher.
Both SPX and Nasdaq have been riding higher along their respective daily upper BB. Both are also showing well-developed bullish formations in their respective daily MAs. VIX closed under 18. For the new week, although market indices still look strong, this rally is extended. Many tech and financial leaders could use a breather. On Tuesday, we have the FOMC meeting. The market may act undecidedly ahead of the meeting. If the market slips ahead of Fed's rate decisions but manages to keep close to SPX 1150, we could get another bump higher on Wednesday. There should be some support between SPX 1130 and 1140. Next week is options expiration for March, so, things will likely be choppy. If the market were to push higher, we'll need to see the commodity sectors rise, as financials and techs have gone quite far last week.
Sector Watch
XLF (financials)
XLF broke above $15.4 last week, but, its daily chart is getting toppy. We could see a test of $15.4. If $15.4 becomes a support, it would bode well for the financials, and thus, the market.
UUP (dollar)
UUP dropped below $23.6 last week and found some support at its 30-day MA. Breaking below $23.4 should take it down to test $23.2.
GLD (gold)
GLD tested $112 two weeks ago and has since pulled back to test the support at $108 again. If $108 breaks, GLD should be range-bound again, with $104 as the low support. With FOMC meeting on Tuesday, I think gold could rally if there are no surprises, which means the interest rates should stay at historic lows.
XME (metals and mining)
XME basically traded flat last week. The daily upper BB continues to open up, hinting for more upwards movements. Above $58, XME could get a breakout. Coals are still strong, led by CLF and WLT. MEE also has been rising with some takeover speculations. Steels are also holding their grounds. X closed above $61 and could see a breakout above $62.5.
MOO (fertilizers)
MOO broke out on Friday as POT raised its profit forecast. MOO has caught its daily upper BB. This sector should push higher. AGU looks interesting to me as CF tied the knot with TRA. AGU could become a takeover target itself. MOS is a bigger company by market cap, but, some buyout speculations also surround it. Technically speaking, MOS has more room to rise than POT at the moment.
Good night and HappyTrading! ™
