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Market Forecast + Sector Watch: SPX, Nasdaq, XLF, XME, XLE, FDN     

Wow, what a week to start September.  Well, instead of saying "a week", maybe it's better to say "2 days"!  First of all, it was really not a full week, given that Monday was a holiday for the US markets.  Secondly, things really didn't go anywhere until Thursday, until a coordinated (yes, you'd better believe it) effort from the central banks to boost the global economy!

Last weekend, in my Market Forcast, I said:

"For the new week, the market may be driven by news again.  It seems like the global markets are waiting for more monetary easing from central banks.  Any confirmed additional easing from either China or the US Fed would definitely give global markets a jolt.  On Thursday, we'll hear from the ECB on its latest policies.  Again, SPX will need to break clear above 1420 to push higher."

As predicted, things didn't go anywhere without confirmed news on more monetary stimuli.  However, the ECB laid out a plan to purchase bonds on Thursday, without changing interest rates.  Then, on Friday, China comes out with infrastructure spending plans to boost its economy, which sent the industrials on a solid bounce.  The 2-day rally boosted the US indices to multi-year highs!

For the week, the Dow was up +215.8 points; SPX added +31.34 points; Nasdaq gained +69.46 points.  Oil remained flat for the week, while gold ran on a "rush", topping $1730/ounce!  Asian markets finally got a boost on Friday, and, at the time of this writing, they are slightly up to start the new week.  Here's how the US market looked after Friday's close:

SPX

SPX added +5.8 points to close at 1437.92.  Its daily MAs and MACD went up.

Nasdaq

Nasdaq climbed +0.61 point to close at 3136.42.  Its daily MAs and MACD also went higher.

Both SPX and Nasdaq broke above significant resistance.  VIX turned back down sharply, ending above 14.  For the new week, the market may need a little breather to start, although we may see the market mixed, as there are still many sectors that could see stronger bounces.  The profit-taking should be shallow, as people who are still sitting on the sidelines would rush in to buy.  Financials were really strong last week, and continued strength in the sector can push the broader market higher.  Energy and mining stocks have a lot of catching up to do.  Techs will run as long as the broader market tone stays positive.

Sector Watch

XLF (financials)

XLF finally broke above the resistance between $15.2 and $15.4.  GS went on a big breakout, gaining $10 last week.  BAC, WFC, and JPM all shot higher as well.  Smaller banks such as STI and PNC also went up.

XME (metals and mining)

XME has been really weak.  It finally popped higher on China's infrastruction stimulus plans on Friday.  Coals really got a boost.  BTU actually turned bullish.  WLT and CLF experienced a solid bounce.

XLE (energy)

XLE also broke out, catching its daily upper BB.  NOV looks ready to push higher.  APA is on the verge of breaking out.  OXY is trying hard to draw a bottom.  APC has also broke out.

FDN (internet)

FDN is attacking its all-time high.  This is significant because this new breakout is still young, and it has a good chance to go higher.  GOOG is above $700 again and could test its all-time high again.  AMZN is already at its new all-time high.  EBAY still looks strong.  Internet going mobile is just making it bigger!  Internet shall be the sector that leads the "super rally" once again!

Good night and HappyTrading! ™

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