Last weekend, in my Market Forecast, I wrote,
"For the new week, the technicals are still carrying a bias to the downside. The M&A activities and the speculations for them are offsetting the inconsistency in the latest economic reports. The M&A activities are bringing buyers into some sectors. However, the industrials have been weak on further economic worries; and thus, this market is still very mixed. We'll have to see if we can get some favorable economic data to get the market back in rallying mode. We have GDP report and consumer sentiment on Friday; and, of course, the unnecessary "weekly" jobless claims on Thursday (once every 2 to 4 weeks would probably be a lot more accurate and won't make people so jittery). The market will have to at least get above the daily MAs to get some breathing room (SPX 1110; Nasdaq 2250). The downside potential is still there and the market will need to see strength early in the week to prevent the downside momentum from building up."
Since the market did not see much strength at the beginning of the week. The downward momentum did indeed built up. And, the market sank lower. It was not until Friday that we saw some relief rally after Fed Chariman Bernanke pledged to act when necessary. On Monday, the market was strong in the morning, but, slid lower into the close. On Tuesday, lower home sales discouraged investors and SPX closed below 1060. On Wednesday, the market touched SPX 1040 in the morning and bounced higher. We locked in some profits on our downside plays in the morning. Thursday demonstrated the downside momentum as the market opened higher on lower jobless claims but could not hold the gains and closed in the red. The downside momentum continued into Friday's open, but, the market soon bounced higher after getting support from the Fed. We wrapped up a very nice month for August, including 100% green on last week's trades.
For the week, the Dow finished lower by 62.97 points; SPX slid 7.1 points; Nasdaq fell 26.13 points. Both oil and gold closed slightly higher. At the time of this writing, Asian markets were mostly higher. Let's take a look at how the US market looks after Friday's close:
Both SPX and Nasdaq tested critical support levels (SPX 1040; Nasdaq 2100) and bounced back. However, both indices closed below their respective daily MAs. For the new week...
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