Last weekend, in my Market Forecast, I wrote:
"For the new week, the world would likely still be watching Europe closely... Technically speak, the market seems to be waiting for a reason to rally
a break higher. The resistance for SPX lies between 1290 and 1300; for
Nasdaq, it is between 2750 and 2800. Financials will once again be
very important. Gold seems to be ready to break higher. Oil also
appears to be strong."
Well, the market started the week as expected. It pushed higher on Monday and Tuesday with SPX nearing 1280 and Nasdaq pushing towards 2730. Since the market was still range-bound, we looked at some earnings plays on Tuesday. However, the market took a nosedive on Wednesday when Italy added to worries on the European crisis. There were some bounces on Thursday, as Europe worked frantically to try to stabilize emotions and pushed for reforms. We made another earnings play (+429% on GMCR puts) using highlighting the same keypoints discussed on Tuesday. On Friday, the market rallied on leaders in Greece and Italy being replaced.
Once again, we traded lightly as the market was taking big swings. Here were the closed trades:
12:18 | HappyTrading GLD ($174.00) Sold to Close 11C172 Nov 172 calls, at $3.35 +31%
11:53 | HappyTrading WYNN ($124.00) Sold to Close 11P125 Nov 125 puts, at $5.00 +67%
11:13 | HappyTrading WYNN ($124.30) Sold to Close 11P125 Nov 125 puts, at $4.50 +50%
10:57 | HappyTrading FCX ($39.20) Sold to Close 11C40 Nov 40 calls, at $1.00 -55%
09:05 | HappyTrading AMZN ($214.20) Sold to Close 1111C220 Nov 220 calls, at $0.73 -82%
For the week, the Dow was up +170.44 points; SPX added +10.62 points; Nasdaq slid 7.4 points. Gold popped higher to trade near $1790/ounce. Oil pushed higher to $99/barrel. At the time of this writing, Asian markets were higher. Let's take a look at how the US market closed on Friday:
SPX
On Friday, SPX added +24.16 points to close at 1263.85, above its daily MAs.
Nasdaq
Nasdaq gained +53.6 points to close at 2678.75. Its daily MAs and MACD were flat.
VIX managed to close above 30. For the new week, the market appears to be in a neutral stance. To break out, SPX will have to push for 1300 while Nasdaq will need to top 2750. On the downside SPX first support seems to be between 1225 and 1230. Nasdaq's support is at 2600. Gold and oil continue to look strong. Financials will likely be leading the markets again, as the world watches over Europe.
Sector Watch
USO (oil)
USO sailed higher last week, and it's at its highest level since August. It closed just above a key resistance at $38. $39 to $40 will present the next resistance.
XLE (energy)
XLE closed just below $72.5, a key resistance. Above this level, XLE can break out. APA, OXY, EOG, HES continued to look strong.
XLF (financials)
XLF closed just below its 10-day MA. The MACD is flat. It is very important the we see strength in XLF. It'll need to push above $13.5 to gain momentum and above $14 to break out. Between $13 and its 30-day MA seem to provide some support. But, this chart is neutral right now and could go either way, which points to how cautious the market is. Big banks were hammered last Wednesday (GS, BAC, JPM, WFC) and did not recover their losses on Friday. MA and V, the credit cards, showed much more resilience.
GLD (gold)
GLD bounced off of its 10-day MA. Gold is once again approaching the $1800 mark. If it breaks above $1800, this time, I think it's ready to go higher, perhaps to test $1900.
Good night and HappyTrading! ™
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