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Market Forecast + Sector Watch: SPX, Nasdaq, XME, XLF, SOXX, GLD

|Includes: AMAG, AMGN, AXP, BIIB, Amex Biotechnology Index (BTK), CELG, GDX, GLD, GOLD, GOLD, MA, NEM, OSIP, PNC, RGLD, V, WFC, XLF

Last weekend, in my Market Forecast, I said,

"For the new week, it looks like the market is trying to send the Fed a message before the FOMC meeting on Wednesday.  What the market is trying to show is the potential "double-dip" if the Fed pulls out liquidity measures too soon.  On Friday, the market will get the latest unemployment rate report.  The next support levels are SPX 1020 and Nasdaq 2000.  But, if the market falls fast, we could see SPX 1000 and Nasdaq 1950 tested.  VIX popped back above 30, which is alarming.  The market tone has turned more bearish for the short-term and could continue to see some weakness to start the week.  We'll have to see how the market responds to the Fed on Wednesday and to the unemployment report on Friday.  We might see some bounces, but, unless the market indices can rise above the daily MAs, the momentum is presently on the downside."

Indeed, the market started on the weak side.  But, it did not fall too much lower than last week's close.  On Tuesday, the market found buyers coming back into commodity sectors as gold jumped to a new record high!  In last weekend's Sector Watch, I alerted to watch GLD for a potential run:

"GLD actually held up quite well, still holding its bullish formation.  The end of the year is usually a strong time for gold.  The question is, with the stock market reeling and commodity sectors falling, can gold rally.  I still expect gold to rise again before the end of the year."

We got into GLD calls just in time to capture some really nice trades this week.  On Wednesday, the Fed left the interest rates unchanged, and we took profits on the rest of our GLD November calls as I commented, "I think gold may need to trade sideways a bit before going higher, although it may test $1100 this week."  On Thursday, the market rallied on good economic data, closing above the 10-day MA, and started to turn the near-term momentum back up.  On Friday, the unemployment rate rose to above 10%, but, the market shrugged off the news and closed higher!  Gold touched $1100 intraday, but, closed around Wednesday's high, which was the forecasted action as I pointed out on Wednesday. 

For the week, the Dow was up +310.69 points (closing above 10,000!); SPX added +33.11 points; Nasdaq gained +67.33 points.  Oil finished slightly higher.  At the time of this writing, Asian markets were mostly higher.  The US market showed some surprising strength on Friday, given the worse-than-expected unemployment numbers.  Let's see how things look after Friday's close.


On Friday, SPX added +2.67 points to close at 1069.3.  It closed at its 20-day MA.  The MACD turned higher.


Nasdaq added +7.12 points to close at 2112.44.  It closed at its 30-day MA.  Its MACD turned up.

Both SPX and Nasdaq have risen above the 10-day MA.  SPX is right at the 20-day MA, above which the SPX index can turn bullish again.  Both indices are also seeing their respective MACDs turning higher.  VIX has fallen back to below 25.  For the new week...

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