Last Weekend, in my Market Forecast, I wrote:
"For the new week, it certainly looks like the upwards momentum is still with the market. Nevertheless, the market is getting toppier every week. Besides more earnings to come, we also have a FOMC meeting on Wednesday and GDP report on Friday. Most analysts agree that the Fed will keep interest rates at historic lows, and the GDP report is expected to be strong. It seems that the only potential force that can go against the market is the on-going discussion on the financial reform. Techs have risen a lot. It looks like buyers may shift thier attention to the commodity sectors this week. The late buying last week on energy and mining stocks have quickly turn these sectors back up. Techs have emerged as the new leaders in this bull run; so, they should be fine as long as the market stays bullish. To continue going higher, the market will likely have to rely on energy and mining stocks. However, if any unfavorable news come out of the financial sector, this market can still get a quick pullback. As discussed last week, the 10-day MAs will be the first supports."
I'm actually quite amazed by what the charts showed last weekend. Things once again turned out as forecasted. The market was volatile. Earnings and economic news tried to keep the rally going. However, the market was toppy, and news on Goldman Sachs and the financial reform did indeed pressure the market lower. We saw the market did a quick drop on Tuesday, as financials led the decline. We were on FAS and NFLX puts with calls on gold plays, and were glad to pocket gains on both sides. Wednesday and Thursday demonstrated the market's resilience to stay up, as Fed and the latest jobs data helped the market's bounce. But, on Friday, possible criminal charges on Goldman Sachs spooked the market again! Investors ran to gold plays for cover, and we locked in more gains on our calls on GOLD. It was a difficult market environment to manuever. You could hardly keep a position overnight, besides gold plays, which pushed higher steadily.
For the week, the Dow was down 195.67 points; SPX fell 30.59 points; and Nasdaq lost 68.96 points. Both oil and gold went higher. Gold traded around $1180/ounce and oil climbed above $86/barrel. This evening, at the time of this writing Asian markets were mixed, while gold and oil were little changed. Let's see how the US market looks after Friday's close:
SPX
On Friday, SPX lost 20.09 points to close at 1186.69. It closed just below the 30-day MA. The MACD sloped down.
Nasdaq
Nasdaq fell 50.73 points to close at 2461.19. It closed just above the 30-day MA. Its MACD turned down.
Both SPX and Nasdaq had basically fallen to their respective 30-day MAs. VIX jumped back to 22. For the new week, how the market does on Monday will be very important. On Sunday, Euro partners agreed to a $145 billion bailout plan for Greece. We'll have to see how the market reacts to that piece of news. But, there are potentially more negative news to weigh on the market. Financial reform and the case(s) against Goldman Sachs are bound to have new developments. Australia's new mining tax could pressure the mining sector. In addition, the oil spill disaster off the Gulf Coast will likely continue to haunt the oil services industry. Thus, upside moves could be limited. The market will have to fight its way back above the daily MAs and test the recent highs before going higher. The market is already toppy. On the downside, once the market breaks below the 30-day MA, the bearish sentiment could grow. If the 30-day MA is broken, SPX could easily come down to test 1170.
Sector Watch
GLD (gold)
GLD closed above $115 last week and can easily break out in the new week. The 10-day MA just turned up again, keeping the bullish formation intact. MACD is also seeing a new bullish crossover. There's soft resistance at $118. But, if GLD breaks higher, it'll likely test $1120, the very least. If the broader market turns lower, however, we'll have to be careful of the gold miners. Sometimes, they can run with the broader market, instead of with gold. So far, the gold miners are showing similar bullish charts as GLD.
XLF (financials)
XLF closed below its 30-day MA and tested the resistance at $16. The daily lower BB is now coinciding with the $16 level. Therefore, if XLF comes down to $16 again, I don't think it'll hold. Its MACD continues to sink lower. Any new unfavorable development in GS or regarding the financial reform, the financial sector can easily turn. FAS is splitting 3:1 on Wednesday (5/5). If the downward momentum picks up, the split could make it go down even faster (every point slipped would be 3 points pre-split).
OIH (oil services)
OIH is already below its 30-day MA and its daily lower BB has opened down. MACD is showing a new bearish crossover. This sector does not look done falling. As of Friday, RIG closed at $72.32 and BP closed at $52.15. At 2009 March's lows, RIG almost touched $40 and BP went below $35. I really, really hope the engineers at these company can figure out ingenious solutions to shut off the spill right away, for the environment's sake. Regardless, OIH's first solid resistance is around $118 to $116. Even if/when the spill is stopped, further repercussions will likely be hitting this sector. Any bounces in RIG and BP could be met with further selling. DO and NE are about to break supports as well.
XME (metals and mining)
XME closed at its daily lower BB and its 10-day MA has slipped below its 30-day MA. This sector looks to be in trouble. With Australia's new mining tax, this sector could see new waves of selling in the coming week. Coals (WLT, CLF, BTU, ANR, MEE) are already very vulnerable. Steels (X, NUE) are starting to pick up downward momentum.
Good night and HappyTrading! ™ 
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