May 21, 2012 at 02:09 AM EDT
Market Forecast + Sector Watch: SPX, Nasdaq, XME, GLD, XLE, XLF, X, FCX, WLT, CLF, RIO, OXY, RIG, DO, APA, V, MA, AXP
Last weekend, in my Market Forecast, I wrote: "For the new week, this market is getting weaker and should test SPX 1340.  If the drop goes sharply, we may see 1330 tested.  SPX 1320 is a strong support.  Financials have turned bearish, which is not good for the market.  Mining and energy remain weak." Well, [...]

Last weekend, in my Market Forecast, I wrote:

"For the new week, this market is getting weaker and should test SPX 1340.  If the drop goes sharply, we may see 1330 tested.  SPX 1320 is a strong support.  Financials have turned bearish, which is not good for the market.  Mining and energy remain weak."

Well, we knew this market was going down.  Everything was weak, just about.  SPX tested 1340 on Monday.  By Tuesday, SPX was already testing 1330.  We locked in profits on our downside plays (too early, it turned out).  An early bounce happened on Wednesday, but quickly faded.  Thursday was all downhill, creating a "mass exodus"!  Friday saw some bounces in the morning.  But, when the FB IPO didn’t inspire buyers, things went south again, sending the market to end at the lows for the week.

We had a pretty good week, although we were perhaps too cautious when our downside plays.

For the week, the Dow was down 451.22 points; SPX tumbled 58.17 points; Nasdaq fell 155.03 points.  Gold bounced a bit, while oil dropped to below $92/barrel.  At the time of this writing, Asian markets were slightly up.  Let’s see where the US market closed on Friday:

SPX

On Friday, SPX fell 9.64 points to close at 1295.22, below 1300.  Its daily MAs and MACD continued lower.

Nasdaq

Nasdaq fell 34.9 points to close at 2779.79.  Its daily MAs and MACD also went down.

Both SPX and Nasdaq closed below their support levels (SPX 1300 and Nasdaq 2800).  VIX popped above 25.  For the new week…

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