Last weekend, in my Market Forecast, I said,
" For the new week, after treading water for the past 2 weeks, the market is starting to slide on to the bearish side. After not being able to break higher during the week, both SPX and Nasdaq ended below the 30-day MA. Further, the MACD is curving down again. These are bearish signs. The drop on Thursday was big, although the volume was not particularly high. We could see some bounces on Monday morning. But, without any positive news, the market may sell into any strength. VIX could easily test 30 from here. SKF and SRS have been trapped very tight ranges since the beginning of May, and could start to move higher. SKF's breakout level is $46 and that of SRS is about $22.5. Financials and energies are barely hanging on. If these sectors break to the downside, SPX should test the 860-880 region. Nasdaq's nearest support is at 1750."
Indeed, everything happened as scripted. We first made money on the downside for most of the week, and, were able to capture a nice trade on GOOG on the upside. On Monday, the market dropped fast at the open and bounced for the rest of the day. VIX tested 30, but, did not close above. On Tuesday, the market turned lower to test the main support levels. We cashed in on the BIDU and MA puts. VIX managed to close above 30. On Wednesday, we traded SKF calls, as the market slumped lower to test SPX 870, and cashed out the downside plays at day highs. When the market bounced, we got into a longside play on GOOG. On Thursday, the market pushed higher, and we took partial profits on our GOOG calls. On Friday, we cashed out the rest of our GOOG calls at a even higher value and watched the market churn (we also did some quick trades on POT puts, which were discussed in our Trading Room).
It was not a nice week for the market, but, a very nice week for our happytraders! For the week, the Dow was down 134.22 points; SPX slid 17.3 points; Nasdaq fell 40.49 points. The Dollar ended basically flat, but, oil took a bit drop. Gold also slumped lower. Let's see how the market looks after Friday's close:
The market was definitely testing the lower end of the recent trading range last week. The bulls are desparately trying to hold on to the support levels. VIX tested 30, but, did not close above last week. But, both SKF and SRS closed above the above-mentioned breakout levels. SPX and Nasdaq both closed near their key support levels: SPX 880 and Nasdaq 1750. At the time of this writing, Asian markets were mostly lower. For the new week...
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