Wang’s Happy Trading

The earnings season is heating up. Optiondragon took the time to go over several potential movers. I also think that YHOO, earnings on Tuesday (1/29), could be very interesting to watch. In addition, the FOMC meeting on Wednesday (1/30) will likely to be crucial.

After an early surge in the morning responding to MSFT’s solid earnings and bullish forecast, the market closed lower on Friday. The Dow was down 171.44 points; SPX slipped 21.46 points; and the Nasdaq dropped 34.72 points.

SPX

SPX got close to the 1375 level, but came back down to close at 1330.61, above the 1325 level. It seemed that the 10-day MA (the red line) acted as a resistance on Friday.

Nasdaq

Nasdaq went above 2400, but closed below the 2350 level. The 10-day MA also was a resistance here, although the MACD continued to climb.

For the new week, I think Monday is going to be very important. The market needs to close above the 10-day MA to make me feel more comfortable. Without a solid move up on Monday, the market becomes more vulnerable to test last week’s lows. Of course, the Fed’s rate decision on Wednesday will continue to affect the market’s mood. I think, at the very least, another quarter-point cut is coming. A half-point slash would probably excite the market.

Now, let’s look at how individual sectors closed on Friday:

INX2 (Internet), SOX (semiconductors), and BTK (biotech) all closed on the weak side. GDX (gold miners) was much higher during the day, reaching almost $52, which could be a breakout point to the upside. However, it closed with just a +0.14% gain. XME (metals and mining) saw a solid rise of +3.32%. MOO also found investors coming back in as the recent sharp sell-off in this sector could present good buy points.

GLD/GDX (gold/gold miners)

GLD made a new all-time high on Friday at $91.08, as gold surged to almost $925/ounce. It tested its 10-day MA, which has turned up again. It also started to push open the daily upper BB. We could see another breakout in the coming week.

GDX closed above its 10-day MA on Friday. A continued move higher would turn its 10-day MA up again. ABX, AEM, and NEM are among the favorites in the group.

OIH (oil services)

OIH has fallen sharply with the market, from $195 to now about $163.5. If oil prices come back up, we could see some quick rebounds in this sector. Its 10-day MA acted as a resistance on Friday, but, staying above $160 is a bullish indicator. RIG, DO, and NOV are among the stronger performers in this sector.

MOO (agriculture)

Even though MON, MOS, and POT have all reported blowout earnings and given upbeat forecasts, this sector has not been able to avoid the recent market sell-off. If the market strengthens, fundamentally speaking, buyers should feel more comfortable getting back into the agriculture plays.

Happy Sunday!
HappyTrading! ™