Last weekend, in my Market Forecast, I said:
"For the new week, the market looks to be on its way to break higher. The daily upper BBs have opened up; the 10-day MAs are crossing above the 20-day MAs. In addition, the 30-day MAs are trying to turn up. These are all bullish signals. This weekend, China announced its intention to loosen yuan’s peg to the US dollar. A higher yuan would make Chinese exports more expensive and help manufacturers of other countries, including the US."
The week turned out to be a big disappointment. On Monday, the market gapped up, but, profit-taking immediately started. On Tuesday, the market was hit by lower-than-expected home sales. Although selling continued, we were able to cash out some winning trades on the long side. The market stayed weak on Wednesday and Thursday, with SPX falling below 1080, the previous support level. On Friday, after a weak open, the market bounced back a little. We still managed to close quite a few winning trades for the week.
For the week, the Dow was down 306.83 points; SPX dropped 40.75 points; Nasdaq fell 86.32 points. Gold took a huge drop on Monday, but, climbed back up above $1255/ounces by the week’s end. Oil was slightly up for the week with a pop on Friday. The market turned quickly last week, going from nearly breaking out on Monday morning to almost breaking down by the week’s end. Asian markets were mixed tonight at the time of this writing. China’s Shanghai SE Composite Index (SSEC) continued to fall, while Hong Kong’s Hang Seng was still strong. Here’s how the US market looks after Friday’s close:
SPX
SPX added +3.07 points to close at 1076.76, still below the 1080 level. The daily MAs and MACD were lower.
Nasdaq
Nasdaq gained +6.06 points to close at 2223.48. Its daily MAs and MACD also went down.
Both SPX and Nasdaq closed below their respective daily MAs. In addition, their daily MAs and MACDs have turned down. VIX popped back up and tested 30 last week. For the new week…
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