Wang’s Happy Trading

It’s SuperBowl Sunday!!

Hope you’re having some exciting and crazy fun!!

The market finished strongly last week, ending Friday with the Dow up +92.83 points, SPX adding +16.87 points, and Nasdaq gaining +23.50 points.

SPX

SPX closed at 1395.42. It closed above the 1375 level, its 10-day MA, and its 20-day MA. The 10-day MA and the MACD have turned up and are rising. The immediate resistance is 1410, which would take SPX above its 30-day MA. Rising above the 1440 level would take SPX to its daily upper BB, which is the level that I’ll be looking at for the market to be out of this correction.

Nasdaq

Nasdaq closed at 2413.36. It closed above the 2350 level and above its 20-day MA. Its 10-day MA and MACD have also turned up. For Nasdaq, the 2550 level is the level that I’m watching for the techs to be out of the correction.

I have been saying that this initial bounce should take SPX to somewhere between 1375 and 1410, since correctly calling the bottom 2 weekends ago. So now what? Can the market continue up, without stopping?

For the new week, I think the market could feel the need to vent. How the market handles the venting will be very important. The market was strong this week, led by the financials. XLF does seem to have strong upwards momentum on this move, which we’ll take a closer look at later (I have also been saying that in order for the market to find a bottom, the financials will need to find a bottom.). If the market can vent without losing much altitude, we may see sideways trading during the early part of the week, and a continued move up above the 30-day MA in the latter part of the week. If the venting is strong, the market may need to test its 10-day MA.

If the market gets an early jump on Monday, I’d be careful if SPX gets above 1410. I’d take profits and wait to see what the market does with this level.

SECTOR WATCH

INX2 (Internet), SOX (semiconductors), SWH (software), and BTK (biotechs) all had solid gaines, notably INX2 and SOX, which were up +4.83% and +5.77%, respectively. GLD (gold) and GDX (gold miners) slumped on Friday, losing 2.24% and 2.38%, respectively. OIH (oil service) made a comeback of +2.78%, even though USO (oil) was down 2.6%! XME (metals and mining) continued to charge ahead, adding +4.3%. PBW (clean energy) and MOO (agriculture) both woke up with nearly +3 advances. FXI (Chinese ADRs) jumped +4.6%.

Now, let’s take a look at some individual sectors:
XLF (financials)

XLF broke above its recent downtrend that started back in Oct 2007 (some would say that it started back in June 2007 on a shallower trend line). Regardless, XLF has risen above its daily MAs and has caught up with its daily upper BB. It could meet some resistance at $30, but, a stronger one resides at $32. MA and GS are still among the favorites in this sector.

BTK (biotechs)

BTK closed above the 750 level this week. Looking at the 1-year daily chart, we see that BTK goes through huge ups and downs, with the mid-range being between 750-800. In the past year, whenever a bottom was reached, BTK spent the next 6-8 weeks climbing up. IBB is a good biotech ETF to watch. Here are its top holdings.

GLD (gold)

GLD closed down slightly this week, with a big drop on Friday. $90 could be the resistance to watch. Breaking above this level again could send it gold to that psychological level of $1000 per bound! If GLD spends the next week under $90, and, especially if it continues lower, $90 could become a near-term top for GLD.

XME (metals and mining)

XME has been “hot” for the past couple of weeks. With BHP/RTP merger still up in the air, this sector is getting lots of attention from the investors. XME has jumped above its daily MAs and caught up with its daily upper BB. The momentum is strong and could carry it up higher along the rising upper BB. ACI, on Friday, reported strong earnings. Its shares hopped more than +12%! Coal is becoming the new “black gold”. Steel plays are “still” hot. CLF recorded a new ATH of $106.41 on Friday, completely ignoring whatever recent market problems there have been. X and NUE also did well. PCU and FCX did not get left behind this time, advancing +4.55% and +3.69%, respectively.

Good night and HappyTrading! ™