It was another volatile week. But, stocks finally pulled back. Last weekend, in my Market Forecast, I wrote:
"For the new week, earnings will kick into full force…. After more than 3 months of gains, investors will look for "fundamental" proof that the economy is getting better. The profit numbers from especially the so-called "blue-chip" companies will have to be good, or even better-than-expected to keep the buyers buying. Both SPX and the Dow are at all-time highs. It won’t take much to give people "excuses" to lock in profits. The question is, "Will buyers keep buying the dips?" There are many support levels on SPX. Immediate support lies between 1580 and 1570. Psychologically, SPX 1600 is a resistance. Earnings from both the financial and tech sectors will be very important."
Well, on Monday, the market took a tumble, dropping 40 SPX points to just above 1550. On Tuesday, a technical rebound took SPX right back up above 1570. (Yes, this is how computers "think". Each move is done by algorithms and each algorithm is guide by technical parameters!) But, the downward momentum prevailed as sentiment shifted. Earnings didn’t help much. Both financials and techs were mostly reporting lower than expected results. SPX fell below 1540 on Thursday afternoon (down just about 50 SPX points) and buying programs kicked in. SPX ended the week just above 1555.
For the week, the Dow was down 317.55 points; SPX fell 33.6 points; Nasdaq stumbled 88.89 points. Gold fell sharply, ending the week at around $1400/ounce. Oil also dropped, trading at around $88/barrel. At the time of this writing, Asian markets were mixed, with Japan bouncing. Gold also seemed to be attracting some buyers. Let’s see how where the US markets stood after Friday’s close:
On Friday, SPX added +13.64 points to close at 1555.25. It closed below its daily MAs. The MACD slid.
Nasdaq gained +39.69 points to close at 3206.06, above 3200. Its daily MAs were flat.
Both SPX and Nasdaq closed below their respective daily MAs. VIX popped above 18 during the week and settle to just below 15 for the close. For the new week…
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