Last weekend, in my Market Forecast, I said:
"For the new week, the momentum has completely shifted to the downside. We can see that the daily MAs in both SPX and Nasdaq are curving down. On Monday, we may see an attempt to bounce; others may call it a relief rally. First resistances will be SPX 1130 and Nasdaq 2300, both of which were tested on Friday morning, but failed. On the downside, the market could easily test the February lows, but it does have some soft supports along the way. Gold looks like it has more room to rise and can easily see a new all-time in the next couple of weeks."
Although the bounce was stronger than expected, the market did fall weak again by the end of the week. Gold did achieve new highs. On Monday, the market jumped on the $1 trillion rescue package for Europe. On Tuesday, Gold soared to a new all-time trading close to $1240/ounce. On Wednesday, the market got a follow-through on the rally. However, by Thursday afternoon, the market was weak again. On Friday, the market fell hard as problems in Europe caused more concerns. We were there to catch the trades on the downside and finished another solid week.
For the week, the market actually kept onto some gains. The Dow was up +239.73 points; SPX added +24.8 points; Nasdaq gained +81.21 points. As mentioned above, gold jumped to a new all-time high. Oil, however, plunged back to nearly $70/barrel. This evening, at the time of this writing, Asian markets were broadly lower. Let's take a look at the US market after Friday's close:
SPX
On Friday, SPX dropped 21.77 points to close at 1135.68. It battled back above 1130, but, still closed under the daily MAs.
Nasdaq
Nasdaq fell 47.51 points to close at 2346.85. It closed below its daily MAs. The MACD also went down.
Although the bounce was strong last week, by the end of the week, the market turned down again. Both SPX and Nasdaq closed below their respective MAs, and the MACDs went lower. VIX jumped back above 31. Tonight, there are some important news that may affect the market. Greece is considering legal actions against US banks. BP announced a successful deployment of a mile-long tube to suck most of the oil from the leak. German Chancellor Angela Merkel said that the $1 trillion rescue package to prevent the Greek debt crisis from spreading only bought eurozone countries more time and did not solve their underlying debt problems. For the new week, the market is in a very vulnerable position. The bounce last week took to the market to test the 10-day MA. But, with a quick reversal, it closed under the 10-day MA again. Further, both SPX and Nasdaq are showing newly developed bearish formations in their respective daily MAs. The problems in Europe seem to continue to unfold and are pressuring the global financial markets. SPX 1120 could provide some initial support, but, below SPX 1120, the market could test SPX 1080. Most sectors share the market's weakness. Gold seems ready to soar higher.
Sector Watch
GLD (gold)
GLD tested $122 and closed above $120 last week. There is little resistance to prevent GLD from going higher. With the debt problems in Europe, investors would surely look to rotate more money into gold. Gold miners also continue to be strong. GOLD, ABX, and NEM have been among the strongest movers.
OIH (oil services)
Oil is very weak. OIH barely closed above $110. BP's new method to contain the oil spill may give this sector a little boost. But, there should be more consequences to follow. Breaking below $110, OIH can easily sink to $100.
XLE (energy)
XLE followed the broader market's movements last week. $56 is the support to break. Below $56, $54 is the next support. APA and HES have been really weak. OXY could finally get dragged down with the sector.
XLF (financials)
XLF held up above the $15 level last week. But, we can also see a new bearish formation in its daily MAs. Its MACD just curved lower. Breaking below $15, the downward momentum can pick up on the financials. Last week, the credit cards broke down on Friday. MA, V, and AXP all visited the lows suffered during the recent "flash crash". GS closed below the $145 level last week and could break down further.
BTK (biotech)
In January, when the market took a quick dive. The biotechs were hardly affected. BTK subsequently made new all-time highs. But, this time, the biotechs fell hard with the broader market. When the market bounced, BTK hardly moved at all. This could be underlining the market's new weakness. Money is not being rotated to biotechs as it did in January's quick drop. This time, money seems to be just coming out of all sectors.
The market could re-test the February lows. The difference is that this time VIX could rise much higher.
Good night and HappyTrading! ™ 
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