Wang’s Happy Trading

Last week, the market was able to rally above the daily MAs before seeing a sharp, profit-taking session on Thursday. On Friday, the market was able to poise itself with minor gains and the techs leading.

SPX

SPX added +5.22 points to close at 1257.76. It closed pretty much right at the 20-day MA. The MACD rose higher.

Nasdaq

Nasdaq gained +30.42 points to close at 2310.53. It closed above its 20-day MA and the 10-day MA has risen above the 20-day MA. The MACD went higher.

The market is looking pretty good. Even though last Thursday’s quick drop may be a bit sharp, but like I said, sometimes these sharp drops may be good for the market to vent quickly and resume the recovery process. Both the Dow and Nasdaq are seeing the 10-day MA above the 20-day MA now. SPX is lagging a bit. This tells me that if SPX were to follow through with similar developments, we could see a broader market rally in the new week. For the new week, the market should continue to look for confidence in the financials. We need to see the financials continue with their recovery process. Oils and the energy sector still look weak and could fall further, which would be good for the overall market. VIX closed below 23 last week. Below 22 would be very good for the market. The daily MAs of the major market indices have begun to turn up. We still need to see the indices to close above the daily MAs. The targets (SPX 1300; Nasdaq 2350) were tested last week, but could not hold. These will be the resistance levels to pay attention to.

Sector Watch
XLF (financials)

XLF tested $23 last week and was held below its daily upper BB. However, it managed stay above its daily MAs. Also, its 10-day MA has risen above its 20-day MA. If this sector moves up again next week, many beaten stocks in this sector could be good plays. Congress approved the new housing bill this weekend. Reactions could be seen on Monday day morning from FRE and FNM. PRU reports on Wednesday, 7/30 PM. JPM, BAC, MA, and GS are still good indicators for this sector.

USO (oil)

USO has fallen below $100. $100-$102.5 was a support. Now, USO is free to fall to the next support at $95.

XLE (energy)

XLE closed below $75 last week and could easily test $70 from here. On Friday, this group tried to hold flat. But, any further push on the downside could start a new leg down.

GLD (gold)

GLD held on to its 30-day MA last week, but the 10-day MA had already started turning lower. $90 is a support. If GLD falls below $90, I think that $1000 target will have to wait.

XME (metals and mining)

XME tested the support at $72 and bounced back to close above $75. The coals rallied on Friday as ACI reported well and BTU also had a solid quarterly earnings earlier in the week.

MOO (agriculture)

MOO tested the support at $54 and bounced back to close above $55. POT reported well on Thursday, but, the group really has not responded yet. This group could be turning the corner right here.

If the financials show renewed strength with the housing bill passed by Congress this weekend, the market should gain even more confidence. Techs should do well, and the overall market has some catching up to do. Since oils and the energy sector are weak, mining and agriculture stocks may see some buyers coming back in to help strengthen the overall market.

Hope you’ve had a great weekend.
Good night and HappyTrading! ™