Wang’s Happy Trading

Last weekend, I said, “For the new week, the market has gone down quite far in a short amount of time and could see some bounces. The market sentiment right now is not very strong. Unless there are some catalysts (news, events, and such) to change that perspective, any bounces could be seen as chances for people to cash more money out. At the same time, there will be eager people that are looking to “bottom-fish”. If SPX 1410 holds, it’ll be very encouraging. The 1440 level now may be seen as the nearest “resistance”.”

There were certainly attempts to bounce, but, there really wasn’t any “positive” catalysts big enough to shift the sentiment. SPX never got close to 1440, but, tried to hold above 1410. Nevertheless, it closed the week below 1410, at 1401.02. On Monday, the market was very volatile and closed slightly positive. On Tuesday, the market attempted to rise, but, ended down, in a big way. On Wednesday, the market finally staged a bounce. On Thursday, there was a minor follow-through and the market managed to add to Wednesday’s gains. However, on Friday, the market still could not shake the overall negative sentiment and fell back into the red. Gold, on the other hand, hit above $900 for some brief moments for a new all-time high at $900.1 an ounce.

Here’s how the market looked after Friday’s close:

Most sectors were weak. GLD (gold) and GDX (gold miners), continued to climb, adding +0.37% and +0.77%, respectively. MOO (agriculture) found some buyers and closed up +0.26%. XLF (financials) was able to gain +0.33%. USO (oil) and OIH (oil services) slid all week. SWH (software) dropped 2.27%, while FXI (Chinese ADRs) tumbled 4.36%.

SPX

SPX lost 19.31 points to close at 1401.02, below the 1410 support level. The next nearest support level is at 1375, mentioned on Tuesday, 1/8/08.

Nasdaq

Nasdaq closed down 48.58 points, at 2439.94. It slid back down below the support at 2450. The next support level is at 2400.

The market sentiment continues to be terrible. For the new week, earnings are starting. The market really needs some positive catalysts to draw the buyers back in; whether it comes from earnings, the Fed, or something else. Without reversing the sentiment, it is hard to expect big buyers to commit themselves. Without seeing committed buying, it is likely that more people are going to cash out on bounce attempts. On the support side, we’ll be watch SPX 1375 and Nasdaq 2400. If the sentiment does change, the market could have a lot of room to rise, for it has really dropped quite far in a short amount of time (100 points for SPX in about two-and-a-half weeks; Nasdaq? almost 300 points in the same time frame!).

Hope you’re enjoying your Saturday. I’ll be back tomorrow with my Sector Watch.

Good night and HappyTrading! ™