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Weekly Wrap-Up + Market Forecast + Sector Watch: SPX, Nasdaq, UUP, GLD, XLF, SOXX, GS, WFC, JPM, BAC, NFLX, PNRA, PCLN, CMG

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Last weekend, in my Market Forecast, I wrote:

"For the new week, the market is in a very vulnerable position.  Commodity sectors remain week and could drag the tech stocks down as well.  On Wednesday, we'll get the minutes from the latest FOMC meeting.  After the market on Thursday, CRM will report, which could affect the tech stocks.  It is going to be options expiration week; so, volatility is to be expected.  Downward momentum from last week could carry through to this week.  We'll be watching the support between 1310 and 1320 on SPX.  If tech stocks break down, we'll likely see a correction in the broader market."

Things once again progressed as forecasted.  Commodity sectors remained weak as the week started and techs sold off sharply on Monday.  On Tuesday, the selloff continued in the morning and SPX 1320 was tested.  Then, all of a sudden, buyers came in, as we caught winning trades on both short and long sides.  DELL reported a strong quarter after the market and set up the techs for a bounce.  Techs were strong on Wednesday and Thursday and supported the market's bounce.  CRM delivered a great quarterly performance and gave a strong forecast.  Friday was a volatile day with commocity sectors weakening again, and the market indices closed below their support levels.

It was not an easy week to trade, but, we still came away with nice winners:
07:10 | HappyTrading VMW ($96.00) Sold to Close 05C95 May 95 calls, at $1.25 -69%
11:38 | HappyTrading VECO ($55.65) Sold to Close 06C55 Jun 55 calls, at $3.20 +28%
10:19 | HappyTrading AAPL ($340.00) Sold to Close 06C345 Jun 345 calls, at $6.30 +20%
08:44 | HappyTrading GLD ($146.03) Sold to Close 06P143 Jun 143 puts, at $1.52 -39%
12:23 | HappyTrading IBM ($171.20) Sold to Close 05C170 May 170 calls, at $1.88 +71%
12:08 | HappyTrading IBM ($171.00) Sold to Close 05P170 May 170 calls, at $1.71 +55%
10:15 | HappyTrading PCP ($152.10) Sold to Close 05P155 May 155 puts, at $3.30 +74%
09:05 | HappyTrading PCP ($152.40) Sold to Close 05P155 May 155 puts, at $3.10 +63%
07:36 | HappyTrading SPY ($133.28) Sold to Close 05P135 May 135 calls, at $2.05 +21%

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For the week, the Dow was down 83.71 points; SPX fell 4.5 points; Nasdaq dropped 25.15 points.  Gold went back above $1510 and oil was basically unchanged.  At the time of this writing, Asian markets were mostly lower.  Let's see how the US market looks after Friday's close:


SPX was down 10.33 points to close at 1333.27, below 1340.  It also closed below the daily MAs.  MACD was down.


Nasdaq dropped 19.99 points to close at 2803.32, below 2825.  It also closed below its daily MAs.  MACD fell, as well.

Both SPX and Nasdaq closed below their respective support levels (SPX 1340; Nasdaq 2825).  VIX, however, stayed below 18.  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 5/22/11.

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Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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