As mentioned in my Weekly Wrap, the market ended down last week, with some commodity sectors acting strong. The Dow ended the week down 312.32 points; SPX lost 25.62 points; Nasdaq slid 31.47 points. The techs held up pretty well, but, the financials were weak.
Let’s take a look at where the market stands:
SPX
SPX tested its 20-day MA, but, managed to close above. The daily MAs kept their bullish formation, but, the MACD (difference) went negative.
Nasdaq
Nasdaq stayed right at its 10-day MA. Its daily MAs still looked healthy while its MACD was flat.
For the new week, the beginning of the week could be very important in shaping how the market moves. VIX came off of the support at $18 last week, but, was not really able to make a move up. If the VIX gets driven below $19, it could easily test $18 again. Breaking below $18 will be good for the market. The XLF was weak last week. We’ll need to see some strength back into the financials. Energy sectors still look strong, as oil prices are at new all-time highs. The techs don’t look too bad either. This week is options expiration week. So, last week’s weakness could be a head-fake to killed off some premiums in the March calls. Then, they might get driven up again to maximize profits. I will be looking at VIX and financials for some indications in the beginning of the week.
Sector Watch
Some major sectors really still look very healthy:
USO (oil)
USO daily chart is very strong. It just keeps on climbing higher along the daily upper BB, and, I don’t think it’s reached a top yet. Energy stocks, however, held pretty flat after the early jump last week. So, there might still be opportunities there. HES, APA, UPL, ECA, and PBR all look interesting. Solar plays hasn’t really moved up all that much recently. So, we’ll be watching them closely.
OIH (oil services)
Oil services had a good week last week, with NOV breaking out Thursday and Friday, which we did catch some good trades in. As a sector, though, OIH’s haven’t broken out yet. RIG could be especially interesting, if the sector rallies, as it reported record earnings, but, didn’t go anywhere…yet. OIH’s daily chart is showing a possible breakout in formation, with the 10-day and 20-day MAs curving up again and the daily upper BB within reach.
XME (metals and mining)
XME’s daily chart also still looks tood. It caugth up with its daily upper BB on Friday, but, pulled back. The 10-day MA is moving above the 20-day MA again and could form a new bullish phase. Steel stocks made new all-time highs last week. Coal stocks also started to breakout. Would be interesting to keep an eye on CNX, ACI, BTU, and MEE. Gold also came back up. GLD, XAU, and GDX all made solid gains.
INX2 (Internet)
Even though the broader market was weak, INX2 held up really well. It closed above its 10-day MA. PCLN reported great earnings on Friday and jumped +12%!
SOX (semiconductors)
The semiconductors were also in good shape, pretty much held flat. SOX closed above the 10-day MA.
With many of the major sectors looking healthy, the market has room to turn around and go higher. This week’s market performance could be very crucial in setting the tone for the 2nd quarter.
Good night and HappyTrading! ™
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