Weekly Wrap-Up (LULU, WDC) + Market Forecast + Sector Watch: SPX, Nasdaq, FAS, XRT, FDN, XLE

We had another good week in the Happy Trades Portfolio.  We locked in gains from WDC and LULU calls:

  LULU Jan 17 2015 Call 47.5 $5.25 69.35% 12/11/2014
  LULU Jan 17 2015 Call 47.5 $4.62 49.03% 12/11/2014
  LULU Jan 17 2015 Call 47.5 $3.99 28.71% 12/10/2014
  WDC Jan 17 2015 Call 105.0 $3.70 32.62% 12/09/2014

This portfolio now has a 78% winning rate!

Markets tumbled last week, ending with heavy selling on Friday! For the week, the Dow was down 677.96 points ; SPX dropped 73.04 points; Nasdaq lost 127.16 points. Oil continued to fall, closing below $57/barrel; gold got a big pop, ending above $1222/ounce.

Here's how the US markets looked after Friday's close:


On Friday, SPX fell 33 points to close at 2002.33. Its MACD and 10-day MA curved lower.


Nasdaq lost 54.57 points to close at 4653.6. Its 10-day MA and MACD also went down.

SPX has quickly stumbled down to test 2000! Nasdaq is doing a little better, but, is pushing on its lower BB. For the new week, both SPX and Nasdaq look vulnerable. SPX 2000-1970 is an important support. Nasdaq has support at 4600. We might see some bounces to start the week. But, the bounces will be sporadic and selective. There will likely be continued selling in various sectors. Any bounce will not overturn the downward momentum unless SPX can rise above 2050. On Wednesday, the all-important Fed meeting will tell us how the Fed sees the US economy now. I think markets may be volatile and range-bound ahead of the meeting. Financials dropped quite a bit last week. Biotech and retail stocks are still hanging on.

Sector Watch

FAS (financial)

FAS closed below its daily MAs. The Fed meeting on Wednesday could give these stocks another jolt! But, in which direction, we will have to wait and see. If this sector bounces, I would focus on the regional banks such as STI and PNC. V and MA are finally showing weakness. The big banks (GS, WFC, JPM, BAC) all closed below their respective daily MAs.

FDN (internet)

FDN's daily chart looks pretty dire. It has turned bearish. However, we could see a bounce here as things consolidate. FB bucked the trend last week and actually closed higher. LNKD closed up as well. On the other hand, GOOG and PCLN were weak.

XLE (energy)

I think we could see some bounces here too. TSO, OXY, and EOG would be my pick. On the downside, I would hit the riggers such as RIG and DO.

XRT (retail)

Well, next week is the week before Christmas. Is this why this sector hung on? XRT managed to close just above its daily MAs. LULU broke out and we caught a nice piece of action. KORS is still shaping up for a breakout. TGT is showing some weakness.

I am probably not going to be in a hurry to trade next week, until we see more clearly what the Fed is going to do. So, lock in profits when you have it and keep lots of cash!

Good night and HappyTrading! ™

Posted to Happy Trades on Dec 15, 2014 — 1:12 AM
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