With the Christmas long weekend, it seems like last week was a while ago! But, last weekend, in my Market Forecast, we discussed,
"For the new week, with only 2 weeks left in trading for 2011, both SPX
and Nasdaq are in the negative territory. It is becoming less and less
likely that the market will get a holiday rally. The market will need
to go above 1260 to get any strength on the upside. If it falls below
1200, we may see further selloff."
Well, on Monday, the market took a sizable fall and SPX went down to 1202, just above 1200. On Tuesday, the market turned 180 degrees as better news came out of Europe, and the US responded with a jump in housing starts. We took a quick +119% profit on an AAPL trade. On Wednesday, the market took a breather. On Thursday and Friday, the market continued to climb as the jobless claims fell. SPX ended the week at 1265.33, just above 1260.
We didn't publish many trades as the market was very volatile and it almost broke down on Monday.
- 09:54 | HappyTrading ONXX ($43.75) Sold to Close 01C40 Jan 40 calls, at $4.20 +83%
- 07:05 | HappyTrading NFLX ($73.80) Sold to Close 1230C72.5 Dec 73 calls, at $3.05 +15%
- 08:17 | HappyTrading TXI ($30.50) Sold to Close 01C30 Jan 30 calls, at $2.50 +6%
- 07:27 | HappyTrading BA ($73.50) Sold to Close 01C72.5 Jan 73 calls, at $2.56 +2%
- 07:24 | HappyTrading GOOG ($628.20) Sold to Close 1223C630 Dec 630 calls, at $3.70 -23%
- 08:17 | HappyTrading BA ($70.70) Sold to Close 01C72.5 Jan 73 calls, at $1.37 -37%
For the week, the Dow was up +427.61 points; SPX added +45.67 points; Nasdaq gained +63.31 points. Gold actually hardly moved. Oil bounced back to almost $100/barrel. While the US market was having a long weekend for Christmas, the Asian markets seemed to be on hold as well. They were mixed with small changes on Monday and this evening, at the time of this writing, they are mixed again. Let's take a look at where the US market closed on Friday:
SPX
On Friday, SPX added +11.33 points to close at 1265.33. Its daily MAs and MACD went up.
Nasdaq
Nasdaq gained +19.19 points to close at 2618.64. Its 20-day MA turned up and the MACD moved higher.
Well, both SPX and Nasdaq closed above their respective daily MAs, although Nasdaq still looked weak. For the new week, the market looks like it could continue this rally. It is almost January, and earnings are about to kick in again. SPX closed above 1260 and just 10 to 15 points higher, this market can break out. Tech stocks have been weaker after ORCL's surprisingly bad earnings. Nasdaq will need to push above 2650 to gain strength. Financials are stablizing, and so are the agriculture stocks. Metals and mining are still weak, but, energy stocks are drawing investors back in.
Sector Watch
XLE (energy)
XLE closed above its daily MAs and the 20-day MA has turned up. Oil was strong last week, so oil services could make a bounce. NOV is among the strongest. Big oil stocks, including XOM and CVX, were very strong last week. OXY, EVEP, EOG, and IOC are in a good shape to rally if the market breaks out.
HGX (housing)
HGX was really strong last week and is looking for a new breakout. SPG and SHW have been very strong. BXP, EQR, ARE, and CPT are other REITs to look at. But, more patience is needed to trade these stocks as they don't move as fast.
SOXX (semiconductors)
SOXX bounced back from the lows on Monday and managed to close above its daily MAs. Semiconductors are going to be very important. It is the driving sector for techs, and, if this market were to break out, it'll need strength in the techs.
XLF (financials)
XLF closed above $13 again, and, this time the daily MAs are starting to turn up. We'll need to see GS back above $100 for the financials to keep going. WFC and JPM are stronger. BLK has a breakout setup.
Good night and HappyTrading! ™
Sign up for FREE membership!
