Market Forecast + Sector Watch: SPX, Nasdaq, UUP, GLD, USO, VIX

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Last week was another brutal week for the markets.  The Dow lost 817.75 points; SPX dropped 113.78 points; Nasdaq tumbled 235.95 points!  The commodity sectors crashed and the techs continued to be weak.  On Monday, House voted down the rescue plan and the Dow lost 777 points; it’s largest single-day drop ever.  On Tuesday, the market bounced back.  But, it didn’t last.  On Wednesday, the market waited for see what the Senate would do with the rescue plan.  On Thursday, even though Senate passed the rescue plan, the market slumped, with the commodities leading the sharp drop.  On Friday, the market poped up early, but, reversed its course and closed at the day low, as the rescue plan was passed by Congress and signed by President Bush. 

Last weekend, in my Market Forecast, I said,
“For the new week, we will have to see how the market reacts as the fate of the rescue plan progresses.  The market seems to still be in an undecided mode, just waiting to see the details of the finalized plan, and of course, whether or not it’ll get approved.  VIX is still pretty high, just below 35.  It’ll have to get pushed below 28 to start turning its daily MAs.  From where it is right now, VIX could still easily pop back above 40.”

Even though the rescue plan was eventually passed, the decision by the House to vote it down on Monday proved to be devastating for the confidence on the market.  The market sold off as the plan was finally passed on Friday.  VIX popped back above 40, closing at 45.14.

Let’s see where the market stands:

SPX

SPX dropped 15.05 points to close at 1099.23, below the 1100 level.  The daily MAs and MACD continued lower.

Nasdaq

Nasdaq fell 29.33 points to close at 1947.39.  Its daily MAs and MACD went lower.

Both SPX and Nasdaq are looking very bearish, closing below significant support levels (SPX 1100; Nasdaq 2000).  Both indices are also riding their respective daily lower BB down.  For the new week, earnings are starting to come in with AA on Tuesday and MON on Wednesday.  There are some talks about Fed cutting interest rates, but, UUP chart is looking pretty strong…

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