Last weekend, in my Market Forecast, I wrote,
"For the new week, on Monday morning, we'll get the latest ISM and construction spending data. For both SPX and Nasdaq, the daily MAs of are moving into a new bullish phase. To break higher, SPX will have to break above 1120. For Nasdaq, the resistance is at 2300."
Right off the bat, on Monday, the market jumped higher, led by energy and mining sectors, and SPX closed above 1120. On Tuesday, the market was flat. On Wednesday, the ADP report (private employment) and ISM Services data were both better than expected. The market rallied higher and we cashed out on some big gains. On Thursday, the market was cautious ahead of the the unemployment report, closing slightly lower. On Friday, the unemployment report came in worse than expected. The market was weak in the morning, but, rallied back in the afternoon and still managed to close above SPX 1200. We wrapped up a really nice week with 100% of our trades landing in the green!
For the week, the Dow closed up +187.62 points; SPX added +20.04 points; Nasdaq gained +33.77 points. Gold bounced back above $1200/ounce, and oil ended higher as well, staying above $80/barrel. This eveing, at the time of this writing, Asian markets were mixed, with the Nikkei (Japan) down about 100 points. Taiwan Weighted Index (TWII), however, broke above the 8000 mark. Here's how the US looked after Friday's close:
SPX
SPX fell 4.17 points to close at 1121.64, just above the 1120 level. Its daily MAs went higher, but, the MACD flattened.
Nasdaq
Nasdaq slipped 4.69 points to close at 2288.47. It closed above its daily MAs. The MACD was flat.
Even though Friday's unemployment report was disappointing, the market rallied back to close above SPX 1120. VIX actually closed down on Friday, below 22! For the new week, the market can run further into its newly developed bullish formation. The market has already stuttered around the SPX 1120 to 1130 area for a long time. If it's going to break higher, it'll have to catch the daily upper BB. This will mean breaking above 1130 first; so, that's the first resistance. On Tuesday, the Fed delivers its rate decision. Let's see what the Fed can do to help get some momentum into the job recovery process. On Friday, we'll get the latest CPI and retails sales data. On the earnings front, reports will continue to pour in, including CSCO on Wednesday. Commodity sectors could still be the leaders if the market were to break out. After a quick pullback on Friday, agriculture stocks still look strong.
Sector Watch
GLD (gold)
GLD made a nice bounce last week, closing above its daily MAs. To get back onto the bullish side, GLD will have to break above that $120 level again. Gold miners have also bounced back. We'll see if GLD can get up to test $120 this week.
XME (metals and mining)
XME closed above the resistance at $52. XME can break out from here. Coals have been particularly strong. I like BTU and WLT. ANR and ACI have been pushing higher and higher. MEE just came to life on Friday.
XLE (energy)
XLE tested the resistance at $66 last week, but, closed just under. Oil services is seeing some good strength and can help the energy sector as a whole. Natural gas stocks, however, looked a bit weak on Friday.
MOO (agriculture)
MOO broke out last week as dicussed in the previous Market Forecast. Now, it is testing the next resistance at $44. Flooding in China and Europe may bring more attention to the agriculture stocks. POT, MOS, CF, AGU are still the favorite names.
XLF (financials)
XLF continued to struggle with that $15 level. If the market were to break out, XLF has to break that $15! So, watch the financials closely for signals. JPM and WFC have been stuck in a trading range. GS broke higher last week and is looking stronger. BAC still shows little strength. AIG could make an interesting breakout.
Good night and HappyTrading! ™ 
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