The market is behaving erratically. Just when things appeared to be stabilizing, the market gets violently volatile again! VIX closed the week above $26, at $26.54. On Friday, the Dow dropped 315.79 points; SPX fell 37.05 points; and Nasdaq stumbled 37.05 points.
SPY (notice I’m using SPY, right now, as I could not get a valid chart on SPX at the time of writing; will update as soon as valid data on SPX become available. SPY shows the same “look” as SPX and will be sufficient to demonstrate the market picture.)
SPY fell 3.05 points to close at 133.82 (SPX fell 37.05 to close at 1330.63). It closed below its daily MAs, but, managed to stay above the 132 support level (for SPX, this support level is 1325). The MACD slid lower.
Nasdaq
Nasdaq stumbled 60.09 points to close at 2271.48. It closed below the 2300 support. Not good! Its daily MAs are turning down again with a look to extend its bearish formation. The MACD also fell.
For the new week, unless there are some “super” positive news (such as the bond insurers coming through with great solution plans), the market looks to be in a tough spot. With Nasdaq closing below 2300, the next immediate support is at 2250, which is only 20 points away. SPX closed only 5 points above the 1325 support level, so, it is not in that much of a better shape. Unless there are positive stimuli early in the week, these levels might find difficulties to sustain this time. For SPX, below 1325, the immediate support is 1300.
Sector Watch
GLD (gold)
GLD made a new all-time high on Friday, at $96.24. It continues to look to go higher, as it climbs its daily upper BB.
SLV (silver)
SLV also made a new all-time high on Friday, at $197.19, although it is a relatively young ETF. SLV is starting to look a bit “toppy”, but the recent volume has been high. The momentum might just carry SLV up some more.
XAU (gold and silver)
XAU is an index that tracks gold AND silver. It is also optionable. It caught its daily upper BB last week, although it saw some profit-taking on Friday. I think this shows potential for some more upside as the 20-day and 30-day MAs are just starting to curve up.
GDX (gold miners)
GDX shows a similar chart to XAU. The two pretty much trade in sync. AEM and ABX are among the favorites in this sector.
FXY (Japanese Yen)
With the volatile equity market contitions, it might not be a bad idea to look at currency trades or vehicles that tap into the currency market. FXY tracks the price of Japanese Yen and has shot up to a new high last week. This may be interesting to keep an eye on. Also optionable.
HappyTrading! ™
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