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Market Forecast + Sector Watch: SPX, Nasdaq, XLF, XRT, XME, BTK     

The market took a sharp fall on Friday, after GOOG's earnings further pressured the selling in techs.  In my Market Forecast last weekend, I said,

"For the new week, a bulk of earnings will come in...  The market tone has turned bearish after the first week of earnings.  If the downward momentum picks up, the market could test SPX 1400.  Earnings of financials and big techs will be very crucial.  Retails and housing data are coming in on Monday and Wednesday, respectively."

Well, from Monday through Wednesday, retails and housing data were better than expected.  The market bounced higher.  But, on Thursday, GOOG's earnings were "supposedly", accidentally released early, and the market slipped again.  Selling picked up late Friday morning and the market suffered its biggest one-day loss in months!

We had some nice trades last week with longside trades earlier in the week and quick downside trades on Friday.  We've raised cash since Wednesday and are now mostly in cash.

For the week, the Dow was up +14.66 points; SPX added +4.6 points; Nasdaq fell 38.59 points.  Gold fell to below $1730/ounce, while oil held just above $90/barrel.  Asian markets were mixed at the time of this writing, with Hong Kong hovering around the flatline, slightly positive.  Here's where the US markets stood after Friday's close:

SPX

On Friday, SPX fell 24.15 points to close at 1433.19.  Its daily MAs and MACD turned down.

Nasdaq

Nasdaq tumbled 67.24 points to close at 3005.62.  Its daily MAs and MACD went lower.

Both SPX and Nasdaq sank below their respective daily MAs.  VIX rose to 17.  For the new week, more earnings will come in, but, this week, the market will start from a more bearish stance.  Here are some notable earnings:

Monday:  CAT, FCX, HAS, BTU, STI (AM); TXN, VECO, VLTR, WDC, YHOO (PM)
Tuesday:  AKS, COH, HOG, UPS (AM); AMGN, BRCM, BWLD, CYMI, GILD, JNPR, NFLX, NFX, PNRA, VMW, WBSN (PM)
Wednesday:  ALXN, BA, EMC, DAL, IACI, LVLT, SAP (AM); AEM, AKAM, ACOM, CAKE, VALE, CLF, FFIV, SYMC (PM)
Thursday:  DDD, MO, AMAG, BIIB, CELG, CME, CNX, FSLR, NOV, OXY, SPG, TZOO, US, VPHM (AM); APKT, AMZN, AAPL, EPAY, CA, COG, CSTR, DECK, DV, DLLR, ESRX, LVS, NTGR, VPRT (PM)
Friday:  CMCSA, WY (AM)

Last week's early gains offset Friday's sharp fall.  SPX's first support is still at 1400.  Financials held up pretty well on Friday.  We'll have to see how they do in the new week.  On a selling that sharp, even the retails have turned bearish.

Sector Watch

XLF (financials)

XLF still closed above $16.  Big banks (GS, BAC, JPM, WFC) actually held up really well.  But, smaller banks have turned bearish, such as PNC and STI.

XRT (retails)

XRT closed below its daily MAs, but, held above the support at $62.  COH reports on Tuesday, while AMZN, DECK, AAPL deliver their earnings on Thursday after market.

XME (metals and mining)

XME still closed above its daily MAs.  Coals have been strong lately, trying to solidify the bottom.  BTU starts things off on Monday morning, followed by CLF on Wednesday afternoon, ending with CNX on Thursday morning.

BTK (biotechs)

Biotechs have been a solid sector in this rally, but, it suffered a big down week last week.  On Thursday, a whole bunch of biotech companies are reporting.

Techs started the selling in this pullback.  We'll be watching earnings on AMZN and AAPL on Thursday.  Two strong sectors, namely retail and biotech, have turned bearish.  Housing would be another strong sector that we'll keep an eye on.

Good night and HappyTrading! ™

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