Wang’s Happy Trading

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The market could not sustain its winning streak today, and saw selling across the board.  Yesterday, I said in my evening post,
“SPX and Nasdaq are both testing their 30-day MAs.  SPX closed above 1000.  These are the initial resistances that we look at this weekend in my Market Forecast. So, we have to be careful here.  VIX intraday charts are nearing bottoms, but, have not bounced.  If the market can go above the 30-day MA, the daily upper BB is within reach.  If not, we’ll have to look for 10 and 20-day MAs for support.”

The market had a very hard time going above the 30-day MA.  Economic concerns and profit-taking proved to be too much pressure for the market to hold up.  Solar stocks led the decline as SPWRA lowered its guidance.  SPWRA dropped a whopping 34.67% on the news.  Other stocks in the sector got hit hard too:  FSLR -14.33%; TSL -16.83%; STP -19.18%; CSIQ -15.76%.  The financials were also weak: ABK -40.88%; BAC -11.33%; JPM -7%; WFC -8.89%.

The Dow was down 486.01 points; SPX lost 52.98 points; Nasdaq fell 98.48 points:

VIX gained +14.31% to close above 50.  Most sectors were in the red.  XME (metals and mining) was down 9.05%.  USO (oil) slipped back 6.17%.  OIH (oil services) lost 5.31%.  GLD (gold) was down, but, SLV (silver) made a modest gain.  XLF (financials) dropped 9.15%.  FXI (Chinese ADRs) slipped 9.41%.

SPX

SPX fell 52.98 points to close at 952.77.  It managed to stay above its 20-day MA.  The MACD was higher.

Nasdaq

Nasdaq lost 98.48 points to close at 1681.64.  It closed at the 20-day MA.  The MACD went up.

The market could not penetrate above the 30-day MA, and, is now testing the 20-day MA.  We’ll have to see how things hold up.  The 20-day MA and the 10-day MA are very close.  Therefore, we might see the 10-day MA being tested also.  In order to keep this bounce going, the 10-day MA has to hold.  After the market, WFC announced plans to raise $10 billion from stock offering to finance its Wachovia purchase.  WFC shares went down more than 4% in AH trading, on top of today’s 9% loss.  CSCO reported solid earnings, but, the forecast was disappointing.  Its shares traded another 5.58% lower in the evening.  WFC and CSCO could weigh on the market even more tomorrow.  We’ll be watching that 10-day MA tomorrow.

Good night and HappyTrading! ™