The stand-off in Washington over the "fiscal cliff" kept buyers on the sideline last week. The market was very volatile with the general momentum on the down side. We didn’t trade much, but did catch a quick trade on AMZN puts with a gain of +111%:
Last weekend, in my Market Forecast, I wrote:
"For the new week, the market will start with a neutral stance. If the downward momentum continues, as we’ll probably not hear from Washington until Wednesday, the nearest support for SPX is 1420. This market is likely range-bound until we hear from Washington. SPX 1440 is still the level to break. Until something substantial happens on the budget deal, we could have a stock-picking environment."
Things pretty went as forecasted. The downward momentum pushed the markets lower. But, SPX held above 1420 on Wednesday. On Thursday, things broke down in the morning, driven by discouraging remarks from the politicians. However, a quick bounce happened in the afternoon as some hope arose. SPX came back up to test 1420. On Friday, when it was apparent that no deal was going to be made before the weekend, the market took a quick drop to the close.
For the week, the Dow was down 252.73 points; SPX fell 27.72 points; Nasdaq dropped 60.7 points. Gold was flat while oil went higher and closed above $90/barrel. At the time of this writing, Asian markets were mixed and some markets were closed before the New Year. Here’s where the US markets stood after Friday’s close:
On Friday, SPX fell 15.67 points to close at 1402.43, just above 1400. It closed below its daily MAs and the MACD went down.
Nasdaq dropped 25.59 points to clsoe at 2960.31. It also closed below its daily MAs and its MACD also went lower.
Both SPX and Nasdaq closed below their respective daily MAs last week. VIX has popped over 22! As I was writing this article, no budget deal had been reached yet. For the new week…
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