Wang’s Happy Trading

During the short week before the 4th of July, the market took a big loss on Wednesday, and that was enough to keep the market in the red, although the market tried to gain some grounds on Thursday. The Dow finished the week down 57.97 points; SPX lost 15.48 points; Nasdaq tumbled 70.25 points.

Let’s take a look at the major market indices:
SPX

SPX added +1.38 points, on Thursday, to close at 1262.9. Its daily MAs and MACD went lower.

Nasdaq

Nasdaq slid 6.08 points to close at 2245.38. It closed below the support at 2250. Its daily MAs sloped lower and the MACD dropped.

Both SPX and Nasdaq look unhealthy. They are just riding the lower daily BB down; their daily MAs are curving down with sharper slopes. For the new week, the market looks still to be on the defensive side. SPX has already penetrated below the March support (1280). Nasdaq just closed below an important support and could be testing the March lows, around 2200, soon. The financials still look weak. Coals and steels got hammered last Wednesday, which forced a sharp turn on XME (metals and mining). The energy-related sectors such as XLE (energy) and OIH (oil services) also saw similar reverals. However, pure commdities are still going higher! Let’s take a look at some of these sectors:

Sector Watch
XLF (financials)

XLF closed below $20, an important support, last week. PRU and STI look like they may break down further. MA closed below $260 and could easily head down to fill the gap at $240.

XME (metals and mining)

XME went from threatening to break out again (above $95) to now breaking down with that sharp drop last Wednesday. It took out the support at $82.5 and could slid to $77.5 before finding the next support. Coals and steels have risen up so much, and now they look very vulnerable. It’ll be interesting to see what this sector does next week, as they tend to move fast in whichever direction.

XLE (energy)

XLE also saw some big reversals last week, preventing its breakout above $90. It is now on its daily lower BB, threatening to break down. We could find some good opportunities here as well. If it breaks down further, recent high-flyers such as UPL and HES could see more pressure. If this sector bounces back, stocks like DVN, APA, and PBR could have a lot more room to go.

USO (oil)

USO broke out last week and has once again caught up with its daily upper BB. This could lead to further breakouts. The daily chart is still very bullish with the daily MAs curving higher. I think we could see USO at $120 soon.

UNG (natural gas)

UNG has been creeping higher. Above $64, it could get a new leg up.

DBA (agricultural commodities)

DBA saw a top around $43 back in March. Now, it is near that target again. Above $43, it’ll likely create a new new leg up.

If the overall market environment stays weak, I’ll be looking at the short side for financials and the market indices, while keeping an interest on the long side for the pure commodities.

Hope you’ve had a fun 4th of July weekend!
HappyTrading! ™