Last weekend, in my Market Forecast, I wrote:
"Technicals are toppy, but, markets just keep climbing higher. For the new week, I think it's better to be cautious. If this market pushes higher, it's going to go parabolic! Support is now between 1860 and 1850 on the SPX."
From Monday to Wednesday, the market struggled to find a direction. We didn't act at all. One of the hardest things about trading is to be able to "not" trade. Sometimes, when the bulls and the bears are fighting it out and the market won't budge in either direction, pressure builds up. Then, when one side gives in, things go really fast in the other direction. Although Tuesday showed a bit of collapse, buyers came in again on Wednesday. Thursday morning, stocks tried to push higher, but, it was a headfake. Soon, selling started, and, the momentum just took over. SPX fell below 1850. On Friday, SPX came up to test 1850, but, was met with resistance, and ended slightly lower.
Our position on gold in GLD came back up this week, so, we locked in the profits. A quick trade on VIX also did well, as selling pressure built up:
- 09:51 | HappyTrading GLD ($132.60) Sold to Close 03C130 Mar 130 calls, at $3.06 +77%
- 09:09 | Ecstatic Plays VIX ($16.50) Sold to Close 0416C15 Apr 15 calls, at $2.50 +16%
- 07:53 | Ecstatic Plays GLD ($131.65) Sold to Close 03C129 Mar 129 calls, at $3.05 +35%
One thing I did notice though is that right now there isn't much premium in VIX calls. VIX puts, on the other hand has higher premiums. This tells me that the market is not ready to go back down yet. People are still looking for VIX to get a pop and then go back down.
For the week, the Dow was down 387.05 points; SPX fell 36.91 points; Nasdaq dropped 90.82 points. Gold popped higher to close near $1380/ounce. Oil fell back to below $99/barrel. Asian markets were mixed on Monday. Here's how the US markets closed on Friday:
On Friday, SPX fell 5.21 points to close at 1841.13. It closed below its 20-day MA. The MACD went lower.
Nasdaq lost 15.02 points to close at 4254.4. It closed above its 30-day MA. The MACD was down.
Both SPX and Nasdaq closed between their respective 20-day and 30-day MAs. For the new week...
To read the rest of this article, please subscribe to HappyTrading "Premium Articles" by going to the Premium Services (click here) page. If you are already a subscriber, please click here: Market Forecast 3/16/2014.