Well, the big news tonight is that Cyprus was able to seal a bailout deal. Asian markets, at the time of this writing, were reacting favorably upon the deal and trading mostly higher. The financial crisis in Cyprus held global markets back last week. But, at the same time, some consolidation was needed and investors were looking for excuses to lock in profits.
In my Market Forecast last weekend, I wrote:
"For the new week, we may see some more profit-taking. Many leading stocks are looking toppy. Financials have been really strong. We’ll keep a watch on the big banks. The nearest support for SPX is between 1550 and 1540. For Nasdaq, first support is at 3220."
Things pretty much went as forecasted. On Monday, SPX came down to test 1550 and closed above. We locked in profits on our AAPL calls. On Tuesday, SPX dropped further to test 1540, but, buyers came in and drove things back up. We took a nice trade on FAS puts. On Wednesday, stocks continued to bounce as Fed remained firm on its "easy-money" policy. Things were volatile and range-bound for the rest of the week, with the broader market ending Friday on a up note. We had a nice trading week with winners on both sides!
For the week, the Dow was down just 2.08 points; SPX slid 3.81 points; Nasdaq fell 4.07 points. Gold rallied above $1610/ounce and oil was little changed. Can SPX finally push higher to make new all-time highs in the new week? Or, are we in for more consolidation? Let’s take a look:
On Friday, SPX added +11.09 points to close at 1556.89, just above its 10-day MA. The MACD flattened.
Nasdaq gained +22.4 points to close at 3245, right at its 10-day MA. Its MACD slid.
We can see the consolidation in the charts from last week, as the indices bounced up-and-down around their respective 10-day MAs. For the new week…
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