Wang’s Happy Trading

The market was down last week, finishing mixed on Friday with the Dow down 64.87 points, SPX slideing 5.62 points, and Nasdaq adding +11.82 points.

SPX

SPX slid 5.62 points to close at 1331.29. It closed above the 1325 support level. The 10-day and 20-day MAs are touching, and the MACD is flattening out.

Nasdaq

Nasdaq added +11.82 points to close at 2304.85. It managed to stay above the 2300 support level. Very similar picture (to that of SPX) here: 10-day and 20-day MAs are almost touching and the MACD is flattening out.

For the new week, things are likely to be very tricky. First of all, it is the options expiration week, where things are normally very volatile with lots of expiration manuevers going on. Second of all, with the 10-day and 20-day MAs touching and the MACD flattening out, indecision and confusion seem to be painted in the charts. If the market is strong and the 10-day MA crosses above the 20-day MA early in the week, we may be range-bound (SPX 1325-1410; Nasdaq 2300-2450). If we see any weakness opening the week, the 10-day MA will likely get pushed below the 20-day MA, which could signal another leg lower.

So, be very careful. To me, cash still seems to be a good safe position for now.

Sector Watch

Looking at the sector indicators, commodities showed strength on Friday. USO (oil), OIH (oil services), UNG (natural gas), XME (metals and mining), GLD (gold), and GDX (gold miners) all made solid gains. USO (oil), in particular, jumped +4.44%. XME (metals and mining) and GDX (gold miners) added +3.27% and +3.59%, respectively. Even DBA (agricultural commodities: corn, wheat, soy beans, and sugar), a new sector ETF on my list, added +2.49%. Commodities and related sectors could be very interesting to watch in the coming week.

DBA (agricultural commodities)

DBA has been going up and up, and has done better than gold in the past 3 months! It took a breather in late January, but, it is once again back up to its daily upper BB! Friday’s jump could be a new breakout move.

OIH (oil services)

OIH has been struggling lately, as one by one, the earnings of the companies among its largest holdings either missed the estimates, or failed to excite the investors. It looks like OIH is trying to establish a base between $155-$160. But, it needs to at least get above $165 to draw investors back in. Any weakness could easily push it to test $150 again.

GLD (gold)

GLD came “rushing” back up last week, finishing above $90 again. Its daily chart looks strong, still firmly in its bullish phase. Catching the daily upper BB again could spell a new breakout!

XME (metals and mining)

XME has been fairly strong among the recent market weakness. Although finishing the week flat, its daily MAs are turning up. Its MACD is also climbing. The buying volume has been pretty good during the past 2 trading session. $70 is the nearest resistance and breaking above that could signal a breakout.

Hope you’ve enjoyed your weekend.
HappyTrading! ™