Wang's Happy Trading

Happy 4th of July Weekend!!

Last weekend, in my Market Forecast, I said,

"For the new week, it could be a very important week to determine the market’s next move.  The market has bounced for 4 days after last Monday’s big drop.  If the market can continue this upwards momentum, we should see SPX 950 tested again.  Of course, breaking above SPX 950 will bring a new leg up.  With VIX down below 26, the market has a good chance to push higher.  We’ll need to see strength in the financial and energy sectors in order for the broader market to break higher.  Techs should stay strong if the broader market is strong.  If the market can sustain any morning weakness on Monday and push higher in the afternoon, it should be a bullish sign.  On the downside, SPX 900 is the immediate support."

We did indeed see some morning weakness and Monday, and, the market did push higher in the afternoon.  However, on Tuesday, the market opened sharply lower as the 2nd quarter came to an end, with commodities leading on the weak side.  On Wednesday, the market tried to rally again, but was unable to break SPX 930.  There was no strength in the financial and energy sectors; thus, the market treaded water in a tight range.  Overall, techs were still stronger than the broader market.  On Thursday, the market was hit by disappointing jobs data, and sank to just below SPX 900.  Friday was a market holiday.

The dollar made a small gain last week with Friday’s jump.  Oil and natural gas both fell lower.  Gold also had a losing week.  Commodity-related sectors were mostly weak.  Biotechs gave up some of recent gains.  The Dow extended its weely losing streak to Number 3, finishing down 157.65 points for the week (although it did fight to stay above 8500 during the week); SPX lost 22.48 points, below 900; Nasdaq slumped 41.7 points, closing below the 1800 mark.  Let’s see how the charts look after Thursday’s close:

SPX

On Thursday last week, SPX fell 26.91 points to close at 896.42, below the 900 level and below its daily MAs.  The MACD went down again.

Nasdaq

Nasdaq dropped 49.2 points to close at1796.52, below the 1800 level.  It also closed below its daily MAs.  The MACD curved lower.

After falling down to test 25, VIX spiked up to test 28.  SKF (financial ultrashort ETF) and SRS (real estate ultrashort ETF) also bounced.  Both SPX and Nasdaq closed below their daily MAs and below their respective key levels (SPX 900 and Nasdaq 1800).  For the new week…

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