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Weekly Wrap + Market Forecast + Sector Watch: SPX, Nasdaq, GLD, USO, UUP, XLF

|Includes: SPDR Gold Trust ETF (GLD), GS, JPM, MA, PNC, STT, USO, UUP, V, WFC, XLF

Last weekend, in my Market Forecast, I said:

"For the new week, we have the FOMC meeting on Wednesday.  It'll be interesting to see how the dollar/gold trade goes ahead of the meeting.  The Fed had already indicated that it will keep the interest rates low for a while.  Since the dollar has bounced quite a bit in the past 2 weeks, it now has room to come back down again, which would send gold back up.  If the recent market dynamics still holds, then, rising gold should be bullish for the market.  Financials started bouncing a bit at the end of last week.  We'll have to see if they could continue to push higher.  SPX 1120 and Nasdaq 2200 are still the resistance levels to break."

As expected, the Fed kept rates at near zero.  However, the dollar went higher.  Investors focused on the improving US economic and pushed the dollar higher, especially comparing to the Euros.  Gold started to climb higher, but, fell after the FOMC meeting.  Financials stayed weak, but, bounced slightly on Friday.  The techs were stronger and the Nasdaq managed to close the week above 2200.  On Monday, the XOM/XTO merger refocused some attention on the energy sector and the market labored higher.  On Tuesday, the market was jittery, and we locked in our gains ahead of the FOMC meeting.  On Wednesday, the Fed kept the rates unchanged.  On Thursday, the market fell as the dollar rose.  After the market, both RIMM and ORCL came through with strong earnings.  On Friday, techs led the market higher.

We finished another light week of trading (gains above +50% are highlighted):
December 17, 2009
10:25 | HappyTrading ISRG ($290.90) Sold to Close AUAAJ Jan 300 calls, at $6.00 -35%

December 15, 2009
12:32 | HappyTrading FSLR ($139.30) Sold to Close QHBLG Dec 135 calls, at $6.60 +29%
12:00 | HappyTrading GOOG ($593.90) Sold to Close GOPLN Dec 570 calls, at $24.00 +229%
11:49 | HappyTrading CLF ($45.66) Sold to Close CGJAC Jan 42 calls, at $4.80 +17%
10:45 | HappyTrading CLF ($45.30) Sold to Close CGJAC Jan 42 calls, at $4.50 +10%
07:16 | HappyTrading FSLR ($142.00) Sold to Close QHBLG Dec 135 calls, at $9.00 +76%
07:13 | HappyTrading FSLR ($140.80) Sold to Close QHBLG Dec 135 calls, at $8.00 +57%

We cashed out on the final portion of the GOOG trade for a +229% gain and made a quick, 1-day trade on FSLR for a +76% return.

For the week, the Dow fell 142.61 points; SPX slid 3.94 points; Nasdaq gained +21.38 points.  Gold, as mentioned earlier, traded lower.  On the other hand, oil, as discussed in last weekend's Sector Watch, did make a bounce.  At the time of this writing, the Asian markets were mixed, almost reminiscent of how last week started.  Chinese and Hong Kong were down, while Japan and Taiwan were up.  Gold and oil were steady.  Let's see how the US market looks after Friday's close:


On Friday, SPX added +6.39 points to close at 1102.47, above the 1100 level.  It closed right at its 20-day MA.  Its MACd was slightly lower.


Nasdaq gained +31.64 points to close at 2211.69.  Its daily MAs were up.  The MACD flattened.

SPX barely hung on to 1100, while Nasdaq broke above 2200.  VIX kept below 22, once again.  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 12/21/09.