MyHappyTrading's  Instablog

Last weekend, in my Market Forecast, I wrote:

"For the new week, we'll pay attention to the GDP and retail reports on Tuesday.  Nasdaq looks really strong.  Its daily upper BB has opened up.  Normally, I'd say that Nasdaq is setting up for a breakout.  But, with this "undecided" market environment, we'll have to wait until Nasdaq has caught up with the daily upper BB and is riding it higher to know for sure.  SPX looks neutral and could go either way.  The important thing seems to still be the dollar, as it affects how both oil and gold moves.  Unlike in 2007 when gold first tested $1000, when gold traded against the market and was looked at as a safe haven; now, gold has been moving with the market and the dollar is being seen as the safe haven.  Oil bounced last week, and with a merger, the energy sector saw some buyers come in.  The financials were still in a slump, until Friday's little bounce.  So, we'll keep our attention on the dollar/gold/oil triangle and the financials."

Indeed, Nasdaq broke out and "rode its daily upper BB higher" (see Nasdaq's chart).  On Monday, the market jumped, although the dollar crept higher.  Energy stocks stayed strong.  On Tuesday, better home sales data kept the positive sentiment on the market.  Coals and steels kept the buyers interested.  On Wednesday, coals and steels continued to make new highs and internet stocks joined rally.  We started locking in profits on a new batch of plays that we started in the beginning of the week.  Thursday was a half-day.  Stocks pushed higher on Christmas eve.  We locked in more profits as GOOG made a new 52-week high.

For the week, the Dow was up +191.21 points; SPX added +24.31 points; Nasdaq gained +74 points.  Even though gold bounced on Thursday and Friday, it was still lower for the week.  Oil, however, made decent gains as inventories fell.  At the time of this writing, Asian markets were up solidly.  Oil and gold were slightly higher.  Let's see how the market looks after Friday's close:

SPX

On Friday, SPX added +5.89 points to close at 1126.48.  Its daily MAs and MACD were higher.

Nasdaq

Nasdaq gained +16.05 points to close at 2285.69.  Its daily MAs and MACD continued higher.

Both SPX and Nasdaq broke out last week.  SPX was finally able to close above 1120, and, Nasdaq was on a steep ride up after passing 2200!  VIX sank to below 20.  For the new week...

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