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Market Forecast + Sector Watch: SPX, Nasdaq, USO, MOO, XLF, INX2     

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Last weekend, in my Market Forecast, I wrote,

"For the new week, the market still looks strong and the market indices look like they could break out.  For a breakout to happen, VIX will likely have to break the support at 16.  Financials have been lagging.  If the market breaks out, we should some strengthening in the financial sector.  Earnings are still coming in: important ones include DIS (after market) on Tuesday, AGU (before market), CSCO and WFMI (after market) on Wednesday.  The political situation in Egypt is still uncertain, so, we may see oil bounce, which could drive commodity sectors higher."

Indeed, VIX closed below 16, financials strengthened, and the market broke out higher.  However, commodity sectors remained weak as Egypt's President stepped down.  On Monday and Tuesday, the market pushed higher and we locked in some profits.  On Wednesday, the market saw some profit-taking.  Thursday started out on a weak note, but, climbed back into the green as rumors about Egypt's President stepping down drew buyers back in.  Thursday evening saw some confusion as Egypt's President passed his powers to the Vice President without mentioned a stepdown.  However, investors cheered as Egypt President's stepping down was confirmed, and, the market broke out higher.

We had a really good week with very nice trades.  On Friday, the market was very active and we had fun picking up some daytrades that doubled intraday.

For the week, the Dow was up +449.56 points; SPX added +18.28 points; Nasdaq gained +40.14 points.  Gold and silver bounced higher, while oil traded down.  At the time of this writing, Asian markets were bouncing higher, after last week's sharp fall.  Here's how the US market looked after Friday's close:

SPX

SPX added +7.28 points to close at 1329.15.  Its daily MAs and MACD continued to glide up.

Nasdaq

Nasdaq gained +18.99 points to close at 2809.44.  Its daily MAs and MACD went higher.

As mentioned above, VIX closed below 16 for the week and the market broke out higher.  SPX closed just shy of 1330 and Nasdaq managed to rise above 2800.  For the new week, a lot of tech stocks are starting to look a bit toppy, although the market has just broken out.  We could see a stock-picking environment where certain stocks are breaking higher while others see some profit-taking, and, the market can still glide up.  Financials look ready to break out.  Agriculture stocks also look strong.  Mining and energy stocks have been lagging and are most vulnerable.

Sector Watch

USO (oil)

Oil is starting to look bearish.  Breaking below $36, USO could drop down to $34.5 below catching a support.  Its daily MAs are moving into a new bearish formation.  Energy stocks have been weak, although oil services are holding up quite well.  NOV, SLB, and RIG are still look solid.

MOO (agriculture)

MOO broke out last week and closed above $57.  POT, MOS, AGU broke out.  CF was lagging as it is waiting for its earnings report on Thursday after market.

XLF (financials)

XLF vaulted up last week and caught its daily upper BB.  It seemed to have finally pulled away from the gravitational force of that resistance between $16.5 and $16.75.  Is this the point of takeoff for the financials?  Not quite, but, if XLF can rise above $18, we could see some momentum pick up in this sector.  But, that doesn't mean that individual stocks can't break out.  PNC and BLK are really strong.  GS has been having some problems and will need to go above $170 to turn bullish.  Exchanges have been drawing buyers with M&A activities (NYX, ICE, CME, CBOE, NDAQ).  Credit cards have been trying to break higher (MA, V, AXP, COF).

INX2 (internet)

INX2 has been clawing it way back since the quick drop 2 weeks ago after AMZN's earnings.  Its 10-day MA has turned up.  If it goes above 330, we could see a breakout.  GOOG has been quite for a while and could be ready to move.  AMZN has been climbing higher and higher since the fall from earnings.  PCLN is also ready to move higher (we'll see how CTRP's earnings reaction is).  I'll be watching all the communication equipment stocks as well, such as APKT, CIEN, FNSR.

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