Last weekend, in my Market Forecast, I said,
"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."
Indeed, that 1130 was the resistance. SPX got as high as 1129.94!! The Fed gave no surprises and kept the interest rates at historic lows. However, a slew of disappointing economic data prompted a big selloff on the market. On Monday, the market crawled higher to test SPX 1130. It was not able to break it. On Tuesday, the market was weak in the morning, but, bounced back up after the Fed announcement. On Wednesday, the market focused on the economic data from China, which showed slowing industrial growth, and tumbled. The market traded slightly lower on Thursday and Friday on low volumes.
We salvaged this week by quickly getting out of longside trades and hopping on shortside trades on Wednesday morning. We did a nice triple-digit profit trade on ICE puts:
August 12, 2010
09:08 | HappyTrading CLF ($59.00) Sold to Close 08057.5 Aug 58 puts, at $1.41 -12%
06:34 | HappyTrading ICE ($100.60) Sold to Close 080105 Aug 105 puts, at $5.20 +117%
August 11, 2010
01:02 | HappyTrading ICE ($102.00) Sold to Close 08P105 Aug 105 puts, at $4.00 +67%
12:48 | HappyTrading ICE ($101.80) Sold to Close 08P105 Aug 105 puts, at $4.20 +75%
06:44 | HappyTrading WYNN ($89.10) Sold to Close 08C90 Aug 90 calls, at $1.90 -46%
06:35 | HappyTrading GOOG ($495.00) Sold to Close 08C510 Aug 510 calls, at $2.40 -56%
August 10, 2010
07:56 | HappyTrading QCOM ($39.60) Sold to Close 08C38 Aug 38 calls, at $1.80 +6%
For the week, the Dow was down 350.41 points; SPX lost 42.39 points; Nadsaq fell 114.99 points. Oil had a huge drop, back down to the $75 level. Gold rose up above $1215/ounce. This evening, at the time of this writing, Asian markets were mostly lower; but, Shanghai (Chinese) market is higher. Here's how the US market looks after Friday's close:
SPX
On Friday, SPX slid 4.36 points to close at 1079.25, just below the 1080 level. It also closed below the daily MAs. The MACD went lower.
Nasdaq
Nasdaq fell 16.79 points to close at 2173.48. It closed at its daily lower BB. The 10-day MA curved down.
Both SPX and Nasdaq closed below their respective daily MAs. The 10-day MAs turned lower. The MACDs crossed over to the bearish side. VIX jumped back above 26. For the new week, the latest development in the charts are certainly not bullish. However, it may not necessarily dictate a breakdown. If SPX 1080 does not hold, the next support is 1060, set back in mid-July. The market could still be range-bound, and, is very mixed. There are still high-flyers such as PCLN and NFLX. In addition, the agriculture sector had just broken out recently. However, most other sectors are weak, especialy the techs.
Sector Watch
TLT (20 Year Treasury Bond ETF)
TLT did a big jump last week, closing above the $102 level. This could be a new breakout. Another up week, we could see a new bullish formation in its daily MAs. The MACD had already crossed over to the bullish side. This does not bode well for the stocks.
USO (oil)
Oil tumbled with the broader market, as concerns about the global industrial growth were revived. USO closed just below the $34 level support and is awefully close to the daily lower BB. MACD was down. These are all bearish signs for the stock market.
GLD (gold)
GLD popped above the $118 level on Thursday and held above it for the week. The daily MAs have begun the turn up. Investors are running to gold again. GLD will need to break the resistance at $120 to break out.
SOXX (semiconductors)
SOXX broke down last week, riding its daily lower BB down to close below 325, which was the support back in early July. The daily MAs have turned down. This is very, very dangerous. Semiconductors can decide where the Nasdaq goes, and they usually do. If this market were to hold, we'll need to see buyers in the semiconductors.
MOO (agriculture)
MOO had just recently broken out. It got stopped at $44, and came back down to test $42. If $42 had turned into a support, the agriculture stocks should stay strong. MOO is still holding its bullish formation in its dialy MAs, although the MACD had just crossed slightly to the bearish side. POT, MOS, AGU, CF are still the stronger stocks in this sector. Chinese stocks in this sector are strong as well. CAGC had just reported strong earnings and jumped +20%. SEED is reporting on Wednesday.
We have a bunch of new economic data coming in next week, including of latest housing data in the beginning of the week. WMT reports on Tuesday and could give some more reading into the health of the consumer confidence.
Good night and HappyTrading! ™ 
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