from MyHappyTrading.com by HappyTrading! ™ Sign up for FREE membership!
After 3 weeks of precipitous falling, the market finally captured a winning week. For the week, the Dow was up +401.03 points; SPX added +41.33 points; Nasdaq gained +61.78 points. Last weekend, in my Market Forecast, I wrote,
“This weekend, around the globe, governments are coming up with plans to collaborate on restoring confidence in the financial system. On Friday, Secretary Paulson also announced plans to purchase stocks in U.S. banks. As the markets open around the globe for the new week, the initial reactions are, so far, positive. U.S. market futures are also up! And, guess what? It’s the options expiration week!! VIX’s daily and weekly charts are all maxed out! I think we’ll need to see VIX drop below 60, early in the week, to get a sustainable bounce. With VIX at 70, and a record high, it has a lot of room to come down to earth. This means that if we see confidence level rise, the markets could have a strong week!”
Indeed, the market did see a strong week. On Monday, the Dow jumped +936 points and VIX dropped below 60. Tuesday was a quiet day as some profits were locked in. But, on Wednesday, the market was hit by another day of sell-off as retail sales data soured the moods. On Thursday, VIX went above 80, but retreated in the after; and, the market roared back. Friday was volatile as October options expired. Let’s take a look at the charts:
SPX
SPX lost 5.88 points to close at 940.55. It tested the 10-day MA again, but, did not close above. The MACD flattened.
Nasdaq
Nasdaq slipped 6.52 points to close at 1711.29. It closed just below its 10-day MA. The MACD was sligthly higher.
The wild ups and downs this week certainly seemed crazy. On the charts, we can see that SPX and Nasdaq were setting a support and trying to break above the 10-day MA…
To read the rest of of this article, please subscribe to HappyTrading “Premium Articles” by going to the Premium Services page. If you are already a subscriber, please click here: Market Forecast 10/20/08.
