Last week, the market could not continue with its new leg up and had a reversal. For the week, the Dow was down 507.17 points; SPX lost 49.42 points; Nasdaq slid 84.18 points. VIX closed above 19, at 19.55; but, its intraday charts are showing “toppiness”.
SPX
On Friday, SPX lost 1375.93 points to close at 1375.93. It caught up with its daily lower BB. Not a good thing for the broader market. Its MACD continued to drop.
Nasdaq
Nasdaq slid 19.91 points to close at 2444.67. It tested its 30-day MA and bounced back. Its MACD was also lower.
This market is in the “danger zone”. I certainly don’t like seeing SPX pushing on its daily lower BB. The techs look much stronger, with Nasdaq’s MAs still holding their bullish formation. After rallying for 2 months from its March lows, the market finally took a break. For the new week, the market could be range-bound (SPX 1360-1420; Nasdaq 2400-2550). If we see strength in the financial sector, things could certainly look better. With the sharp drops last week, this market could need sometime to turn the momentum around. We’ll also continue to watch VIX. Having VIX below 18 would make me feel more comfortable. We are also seeing money being rotated. Techs are now looking better than the overall market.
Sector Watch
XLF (financials)
XLF has been sliding and sliding. It is, again, testing the support at $24.5. If it bounces up from here, it’ll likely help the overall market to find some buyers.
USO (oil)
Oil’s dramatic rise since the beginning of the year has led the energy stocks to new heights. Interestingly though, USO and UNG were both up on Friday, but, most energy stocks were down. Is this a sign that the smart money is starting to rotate out of the oil stocks? If yes, perhaps oil itself could be getting toppy, although we could see one last burst in USO before it finds the near-term top.
PBW (clean energy)
PBW had a down week with the rest of the market, although it just started a new bullish formation with its daily MAs. With oil prices going up and up, I still find this sector very attractive, especially the solar plays.
GLD (gold)
People are buying up gold again. GLD has risen above its daily MAs and seems to be attempting to climb higher on its daily upper BB. Its 10-day MA is already above the 30-day MA, and the 20-day MA is curving up. Breaking above $92 could send gold flying again!
Good night and HappyTrading! ™
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