This market has been pretty crazy! Monday's drop was pretty unreal! The Dow was briefly down over 1,000 points. This was after falling three days in a row the week before. SPX fell down to 1867 before bouncing.
But, as expected, buyers came in on Tuesday, although the gains did not hold. Wednesday was a different story. Buyers drove stocks back higher and the buying continued into Thursday. Friday was a flat day and the major indices eked out a gain for the week.
We had a very profitable week finding winners on both sides. On Monday, we cashed out a big winner in GOOG puts, with +301% profit. We then jumped into the up side with calls in NFLX, SCTY, and MBLY. NFLX calls gave us an overnight +68.7% gain! Here are the closed trades for the week:
For the week, the Dow was up 183.26 points; SPX added +17.98 points; Nasdaq gained +122.28 points. Gold fell to around $1130/ounce. Oil (WTI) bounced strongly, to near $45/barrel. At the time of this writing, Asian markets were mostly lower. Here are how the US markets looked after Friday's close:
On Friday, SPX added +1.21 points to close at 1988.87. It closed just below its daily MAs. Its MACD went up.
Nasdaq gained +15.62 points to close at 4828.33. It closed just above its 10-day MA.
Both SPX and Nasdaq came down sharply and bounced sharply. For the new week, the market starts at a neutral position as the market consolidated on Friday. But, stocks may slip as the buying momentum wanes. Before the sharp drop, people were looking for a pullback. The pullback was so sharp that it brought most sectors into the correction territory in just a few days! Thus, the sharp bounce is warranted. Now, that the bounce has taken out the downside overshoot, we may see stocks slip again.
One good thing about the sharp drop that we have seen, is that now we have some support to work with. The low-end support lies around 1880. Higher support is at between 1960 and 1940. On the upside, there is resistance at 2000.
In the new week, we have once again the latest jobs data to look forward to on Friday.
Although the financials bounced with the broader market, they did not bounce as much. The strength was in energy and tech stocks. Big banks are all weak. MA and V did find buyers and holders, though.
We have to look toward the market leaders, and right now, they seem to be the internet giants. GOOG, AMZN, NFLX, and PCLN are bounced to the top of their respective daily MAs. FB is lagging a bit, but, still finished the week in neutral territory.
Energy stocks bounced strongly with oil last week. We will have to see if the oil will continue to bounce. EOG looks pretty strong. DO has also turned bullish. Over the weekend, Buffett's Bershire Hathaway revealed a $4.5 billion stake in PSX. The refiners already trade higher on Friday. I think we can see more strength in TSO and VLO as the week opens.
XME (metals and mining)
XME bounced sharply last week and ended above its daily MAs. FCX was a big gainer as Icahn took a stake in the company. Steel stock rose higher as well. Coal stocks also bounced. ACI has quadrupled in two weeks! BTU and CNX also went up. Now that we are trading stocks in this portfolio, perhaps BTU and CNX could be nice plays on the upside.
Good night and HappyTrading! ™