Happy Labor Day! Hope you've had a nice, restful, long weekend.
Last weekend, in my Market Forecast, I wrote:
"For the new week, although the market indices are showing a bullish formation, not being able to push higher after going above the recent trading range throws a shadow on the market's recent rally. SPX's immediate support is at 1015, and for Nasdaq, it is at about 2000."
Indeed, the market started out the week on the downside and those support levels were tested. On Monday, the market flashed the "danger" sign as it tested SPX 1015 and Nasdaq 2000. On Tuesday, the market plunged below those support levels. We took the advantage of the weakness in the financials by locking gains on AIG puts. On Wednesday, the market struggled to stay green, but, gold and silver stocks came alive. We switched gears quickly and play the long side on names such as AEM, PAAS, and GOLD. On Thursday, gold/silver stocks stayed strong, allowing us to lock in profits on our plays. The market was cautious ahead of the unemployment report, but, ended in the green on a small rally just before the close. On Friday, the market interpreted the unemployment data positively and pushed the indices back above SPX 1015 and Nasdaq 2000, giving us another week of great trading!
For the week, the market did lose some grounds. The Dow was down 102.93 points; SPX lost 12.53 points; Nasdaq was a bit stronger, sliding only 9.99 points. Asian markets had a good start on Monday as the US market was closed in observance of Labor Day. Let's see where SPX and Nasdaq stand after Friday's close:
SPX added +13.16 points to close at 1016.4, above the 1015 level. It closed right at its 10-day MA. The MACD was slightly lower.
Nasdaq gained +35.58 points to close at 2018.78, above the 2000 level; and, above its 10-day MA. The MACD flattened.
The past week was an interesting one. After breaking above the recent trading levels, the market had a hard time pushing higher. Instead, it took a quick drop to test key levels. The support levels held up and the market ended just above the recent trading range again! We have gotten some more encouraging economic data, including better-than-expected housing, factory, and unemployment reports....
To read the rest of 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 9/7/09.