Major U.S. indices moved lower going into the new year as investors took profits off the table following a highly successful 2013. Federal Reserve Chairman Ben Bernanke indicated that 2014 could be a better year for the U.S. economy with several factors holding back growth abating in recent months. Improving consumer finances and higher housing prices have bolstered spending while government spending cuts and tax increases could be on the decline this year.

International markets followed the U.S. market lower in many cases. For instance, Germany’s DAX 30 fell 1.61% and the U.K.’s FTSE 100 fell 0.3% over the shortened trading week. In Asia, Japan and Taiwan both reported strong exports but concerns remain in China where the economy appears to be slowing. In the eurozone, there are some signs of economic strength but investors remain concerned with high unemployment and austerity fatigue.

The SPDR S&P 500 (ARCA:SPY) ETF fell 0.52% this week. After reaching new highs late last year, the index moved lower towards the middle of its price channel and new pivot point at 181.96. Traders should watch for a breakdown from this level to S1 support and the 50-day moving average at 178.89 or a rebound higher to retest its upper trend line and prior highs at around 186.00. Looking at technical indicators, the RSI appears neutral with a reading of 57.02 but the MACD looks as if it could experience a bearish crossover over the near term.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF fell 0.05% this week. After reaching new highs late last year, the index moved slightly lower off of its upper trend line towards its new pivot point at 162.56. Traders should watch for a breakdown below this level to its lower trend line, S1 support, and 50-day moving average at 159.06 or a rebound higher towards its upper trend line at around 166.00. Looking at technical indicators, the RSI still appears oversold at 63.56 and the MACD could see a near term bearish crossover.

The PowerShares QQQ (NASDAQ:QQQ) ETF fell 1.01% this week. After reaching new highs late last year, the index moved sharply lower below its new pivot point at 86.57 and towards its S1 support. Traders should watch for a move to this level at around 85.18 or a rebound higher past its pivot point towards its upper trend line at around 89.00. Looking at technical indicators, the RSI remains at a neutral 52.69 but the MACD experienced a bearish crossover that could suggest further downside ahead.

The iShares Russell 2000 (NYSE:IWM) ETF fell 0.41% this week. After reaching new highs late last year, the index moved lower towards its pivot point at 113.41. Traders should watch for a breakdown from this level towards its lower trend line, S1 support and 50-day moving average at around 111.26 or a move higher towards its upper trend line at around 116.50. Looking at technical indicators, the RSI appears modestly overbought at 57.07 while the MACD looks as though it could experience a bearish crossover signaling more potential downside ahead.

Summary

The major U.S. indices moved lower this week with many of them on the brink of a bearish MACD crossover. Next week, traders will be closely watching a number of economic indicators including international trade data on January 7th, FOMC minutes on January 8th, jobless claims on January 9th, and employment data on January 10th. After the significant rally in 2013, traders will likely see profit-taking continue throughout the first few sessions of the new year.

Charts courtesy of StockCharts.com.

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