The market had a “gap-up” open today as oil took a huge dive on the news that damages from Hurricane Gustav seemed to be limited. But, when SPX went above 1300, the market started to turn lower again! This weekend, in my Market Forecast, I said,
“Both indices are still within their recent ranges: SPX 1260-1300; Nasdaq 2350-2450. VIX bounced up to its 20-day MA (not shown here) and closed above 20. For the new week, although we only have 4 trading sessions, I think it could be a very crucial week. VIX could test 22 from here, which would not be good for the market. SPX’s daily MAs are getting pinched closer and closer together; this could signal big movements coming soon.”
VIX tested 22 today and closed at 21.99, and, we saw some big swings on the market. The high on the Dow was 11,709.17 and the low was 11,471.9; a swing of more than 300 points! In the Sector Watch, we also looked at USO and UNG seeing the potential to test the recent lows. Today, both broke below their support levels!
Energy-related stocks got dragged down lower with oil and natural gas. XLE (energy) took a hit and dropped 5.49%. Solar stocks were also weak. Metal and mining stocks were among the biggest losers: RTP -10.46%; X -10.28%; BTU -11.96%; ACI -14.84%; MEE -10.02%. Fertilizers recorded some big losses as well: MOS -8.93%; CF -9.44%; POT -6.53%.
The Dow was down 26.63 points; SPX slid 5.25 (after being up +20 points!); Nasdaq slipped 18.28 points (was up more than +45 points in the morning!):
Most sectors ended red, with commodity-related sectors recording steep losses: USO (oil) -3.96%; UNG (natural gas) -9%; XME (metals and mining) -7.33%; OIH (oil services) -5.07%; GDX (gold miners) -6.35%; GLD (gold) -3.07%. MOO (agriculture) fell 4.45%. XLF (financials) added +1.4% while HGX (housing) gained +1.63%. FXI (Chinese ADRs) fell 1.85%.
SPX
SPX slid 5.25 points to close at 1277.58. It closed at its 30-day MA. The MACD stayed flat.
Nasdaq
Nasdaq lost 18.28 points to close at 2349.24. It closed below its daily MAs and just below the 2350 level. Its MACD went lower.
The market is trading fast, up and down within the recent ranges (SPX 1260-1300; Nasdaq 2350-2450). Nasdaq closed just below 2350, the lower end of its recent range. VIX popped up to 22. Commodities took a big hit today and could be starting a new leg down. USO’s next support is at $85, while UNG is basically at its all-time low! 2 months ago, UNG was at almost $64, its all-time high; it closed at $33.45 today, almost 1/2 of its value at the end of June!! MOO also broke down below its recent support ($50), and, could slide lower from here.
So, SPX and Nasdaq are barely hanging on. Commodity sectors are looking weak again. On the other hand, the financial and housing sectors are bouncing nicely. Still getting mixed signals. We’ll be watching Nasdaq closely tomorrow to see how it handles 2350. Also, if VIX goes above 22, it would not be good. Be very careful!
Good night and HappyTrading! ™
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