It's difficult to keep a normal tone when there's so much going on in the world right now, especially after seeing the images from Japan:
The latest from Japan is a hydrogen explosion at Reactor 3. Let's hope the nuclear reactors won't get any worse and will be contained. Nikkei is presently down over 6%.
Last weekend, in my Market Forecast, I wrote:
"For the new week, the market still looks vulnerable. Higher oil still can pressure the market. In addition, financials have gotten weak. Techs are still strong, especially in the semiconductor/networking/communication equipment sectors. If SPX holds above 1300, we could see a mixed and volatile market. If SPX 1300 does not hold, we could see a sharper pullback."
I also said, "If SOXX pulls back, I think the broader market will too."
Things pretty much happened as forecasted. From Monday through Wednesday, we saw "a mixed and volatile market," as SPX stayed above 1300. However, SOXX fell hard on Monday and continued to pullback throughout the week. On Thursday, the broader market finally gave in to the latest economic news and fell below SPX 1300. On Friday, the market bounced a little, even though Japan was hit by the earthquake and tsunami. We were on the downside plays throughout the week and took a quick long trade on Friday, finishing up a very nice week with winners on both sides!
For the week, the Dow was down 125.48 points; SPX fell 16.87 points; Nasdaq dropped 69.06 points. Gold and oil were both lower. At the time of this writing, Asian markets were mostly lower. China, however, is holding near flat. Let's see how the US market looked after Friday's close:
On Friday, SPX added +9.17 points to close at 1304.28, just above 1300. Its daily MAs and MACD slid.
Nasdaq climbed +14.59 points to close at 2715.61. Its daily MAs and MACD also went down.
Both SPX and Nasdaq managed to bounce on Friday to close the week above their respective support levels. VIX fell back down to just above 20, from a near breakout on Thursday. 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 3/13/11.