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Weekly Wrap-Up + Market Forecast + Sector Watch: XLF, GLD, XRT, XLE     

It was another volatile week.  The market pushed higher ahead of the election day, but, took a sharp fall on Thursday and Friday as investors shifted their focus on the fiscal cliff and uncertainties in Europe.  Financials led the drop.  Last weekend, in my Market Forecast, I wrote:

"For the new week, besides earnings, there's the US election and an important vote in Greece to approve a new round of austerity measures.  On the downside, SPX could easily test 1400.  If that does not hold, 1380 to 1375 could be tested.  If the market decides to bounce, it'll have to go above 1440 to go anywhere."

On Tuesday, the market went as high as 1433.38.  Then, it gapped lower on Wednesday morning.  On Friday morning, it went as low as 1373.03, before seeing a bounce to just above 1390.  SPX closed just below 1380 for the week.  The market was too erratic to trade much, here are the closed trades for the week.  Our safety plays on SPY puts did well, and a quick overnight +70% profit was taken on LVS puts:

  • 10:43 | Ecstatic Plays GOOG ($662.80) Sold to Close 11C665 Nov 665 calls, at $6.80 -7%
  • 07:39 | HappyTrading AAPL ($546.60) Sold to Close 11C460 Nov 460 calls, at $6.00 +33%
  • 07:25 | HappyTrading COH ($54.40) Sold to Close 11P55 Nov 55 put, at $1.35 +23%
  • 07:11 | HappyTrading GILD ($65.40) Sold to Close 11P65 Nov 65 put, at $2.35 -13%
  • 06:55 | Ecstatic Plays LVS ($42.65) Sold to Close 11P45 Nov 45 put, at $2.65 +70%
  • 08:10 | Ecstatic Plays WFM ($92.00) Sold to Close 11P95 Nov 95 put, at $3.50 +15%
  • 10:44 | Ecstatic Plays FAS ($106.00) Sold to Close 1109P106 Nov 106 put, at $2.37-26%
  • 08:08 | HappyTrading APC ($70.70) Sold to Close 11C72.5 Nov 73 calls, at $0.82 -47%
  • 08:04 | HappyTrading SPY ($139.90) Sold to Close 11P142 Nov 142 put, at $2.80 +87%
  • 10:45 | Ecstatic Plays SINA ($58.20) Sold to Close 11C55 Nov 55 calls, at $4.70 +42%
  • 08:51 | HappyTrading SINA ($57.30) Sold to Close 11C55 Nov 55 calls, at $3.95 +20%
  • 07:06 | HappyTrading SPY ($141.10) Sold to Close 11P142 Nov 142 put, at $2.25 +50%

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For the week, the Dow was down 277.77 points; SPX fell 34.35 points; Nasdaq dropped 77.26 points.  Gold bounced higher, closing around $1730/ounce, while oil held flat, around $86/barrel.  At the time of this writing, Asian markets were mixed with Japan's Nikkei trading lower.  Here's how the US market closed on Friday:

SPX

On Friday, SPX added +2.34 points to close at 1379.85, just below 1380.  Its daily MAs and MACD were lower.

Nasdaq

Nasdaq gained +9.29 points to close at 2904.87.  Its daily MAs and MACD slid.

With the big drops on Wednesday and Thursday, SPX and Nasdaq were both taken down to test their next supports (SPX 1380 and Nasdaq 2900).  VIX remained above 18.  For the new week, we may start to see some bounces.  SPX now has resistance between 1400 and 1420.  Markets now may be more "news-driven" than usual as the recent pullback have rendered stocks range-bound for the near term.  If the markets do bounce, we'll likely see a stock-picking environment.  Financials broke down last week as industrials and techs fell lower.  On the downside, the support between 1360 and 1380 will be very important.

Sector Watch

XLF (financials)

XLF closed below its support at $15.6.  Its daily MAs have begun to turn lower.  GS took a quick fall from about $126 to $116.  JPM and WFC followed lower as well.  MA and V held up pretty well, at least for now.

GLD (gold)

GLD went the opposite way as the market this week.  It still needs to clear $170 to go bullish.  Gold miners, on the other hand remained week.

XRT (retails)

XRT turned bearish this week.  This group has been strong through the summer, but, took a beating last week.  KORS, RL, TIF all fell sharply.  LULU is starting to look very weak.  JCP reported disappointing earnings on Thursday evening.

XLE (energy)

XLE got a strong pop on Tuesday, perhaps on a possible Romney win.  But, it gave back all the gains, and more, after Obama's re-election.  APA, OXY, NOV and SLB all fell.  RIG gave back all of its earnings gain.

Good night and HappyTrading! ™

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  • GMCR/10C130
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  • GILD/09P103
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  • at $4.00 by Ecstatic Plays
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  • at $12.50 by Ecstatic Plays
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