Last weekend, in my Market Forecast, I said,
"For the new week, the market will start on some shaky grounds. Once again, it’s mostly about the earnings! On Tuesday, before the market opens, C reports, and after the market, we’ll hear from IBM. These could set the tone for the broader market until Thursday, when GS reports in the morning, while AXP and GOOG deliver in the afternoon. UNP also reports on Thursday morning and good give some more clues on the economy; its competitor CSX will have reported after the market on Tuesday. On Friday morning, GE will present its report card. So, it’s going to be a busy week with numbers from some key bellweather companies. On the top, we’ll still be eyeing that SPX 1150 level. But, if SPX falls below 1120, the market could turn bearish."
In addition to earnings, two other big events came in to play. One came from China, the other from President Obama. On Tuesday, investors brushed aside C’s earnings report and rushed back into the market, driving stocks higher. After the market, IBM reported solid earnings, but investors took profits on the news. On Tuesday night, China announced that it will try to prevent a "bubble" in its economy by curbing lending from the banks. Asian markets plummeted overnight. On Wednesday, the US market followed. On Thursday, Obama proposed setting new regulations on big banks to limit risk. This scared the markets even more, resulting in SPX closing just below that 1120 level! As forecasted, market sentiment turned bearish. On Friday, things turned ugly in the afternoon, and stocks slid into the close! However, we had a fairly good week. First of all, we didn’t trade as much, as the market was very volatile. Secondly, we traded on both sides carefully.
For the week, the Dow was down 436.67 points; SPX fell 44.27 points; Nasdaq slumped 82.70 points! Both gold and oil dropped harshly on the news from China. At the time of this writing, Asian markets were mostly lower, with Hong Kong down more than 1%. Gold was trading slightly higher and oil was flat. Let’s see how the US market looks after Friday’s close.
SPX
On Friday, SPX fell 24.72 points to close at 1091.76, below the 1100 level. Its 10-day MA and MACD turned down.
Nasdaq
Nasdaq lost 60.41 points to close at 2205.29, just above the 2200 level. Its 10-day MA and MACD curved lower.
Both SPX and Nasdaq fell sharply last week, losing the gains made since December 09’s breakout in just 2 days! VIX has risen considerably, jumping from 18 to touching 28 in that same 2-day period! For the new week…
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