MyHappyTrading.com's  Instablog

The market popped higher this morning.  But, after 2 hours of trading, it took a sharp dive and continued lower until the close.  It was a similar move as what happened on Friday.  In both case, the dollar bounced.  Commodity sectors were mostly red.  The gold and silver plays were especially weak.  Financials also fell further:  MA -4.01%, HIG -6.1%, PRU -3.6%, PNC -3.24%, BAC -5.06%.

This morning, SOHU reported disappointing earnings and saw its shares swoon 16%!  After the market, another Chinese internet company got hammered!  BIDU reported a solid quarterly profit but its guidance was soft.  BIDU shares tumbled almost $57 in after-hours trading!  LULU raised its earnings forecast and its shares jumped +6.38%.

The Dow was down 104.22 points; SPX fell 12.65 points; Nasdaq lost 12.62 points.  GDX (gold miners) led the commodity sectors lower, down 4.28%.  Others did not fare well either:  OIH (oil services) -2.24%, XLE (energy) -1.65%, XME (metals and mining) -2.8%.  Both USO (oil) and UNG (natural gas) were down.  GLD (gold) and SLV (silver) lost grounds as well.  XLF (financials) dropped -2.58%.  FXI (Chinese ADRs) slipped 0.92%.

SPX

SPX lost 12.65 points to close at 1066.95.  It closed below the 1080 level.  The MACD curved down.

Nasdaq

Nasdaq fell 12.62 points to close at 2141.85.  It closed below the 2150 level.  Its MACD went down.

As the dollar bounced, commodity sectors came under pressure.  Financials were also weak.  These were discussed in the Sector Watch last night.  Even though the market was strong at the open, it was not able to shake the selling pressure from the recent consolidation.  The rising dollar may be seen as the driving force for the market's recent movements.  But, it may also be simply funds being rotated during a consolidation phase.  VIX rose again today and closed above 24, but, should see some resistance at 25.  Both SPX and Nasdaq closed below their respective support levels and are testing the 20-day MAs.  As I said in the Market Forecast last night, "Some major sectors are barely hanging on to their support levels... So, be more careful in the new week."  If the 20-day MAs don't hold, we'll be looking to play the downside this week.

Good night and HappyTrading! ™