Major U.S. indices were largely unchanged this week after a bearish employment report on Friday erased earlier gains. Higher energy exports helped shrink the trade deficit to four-year lows and private sector employment picked up igniting hopes for a faster recovery towards the middle of the week. However, Friday’s employment report showed that the economy added just 74,000 jobs versus a 200,000 estimate which sent the major indices lower on Friday.

International markets moved mostly higher this week. Japan’s Nikkei 225 fell 2.33%; Germany’s DAX 30 rose 0.32%; and, Britain’s FTSE 100 rose 0.19%. In Asia, Japanese stocks fell on profit-taking in the new year while slowing Chinese export growth caused some concern. In Europe, the eurozone economy shrank 0.3% during the third quarter but some positive signs of economic growth helped ease pressure on the ECB to take near-term action.

The SPDR S&P 500 (ARCA:SPY) ETF fell 0.02% as of early trading on Friday morning. After rebounding off of its upper trend line, the index moved towards the middle of its price channel, just above its pivot point at 181.96. Traders should watch for a rebound from the pivot point and lower trend line or a break down to the S1 support and 50-day moving average at around 179.55. Looking at technical indicators, the RSI remains slightly overbought with a reading of 59.63 while the MACD recently experienced a bearish crossover that could signal downside ahead.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.02% as of early trading on Friday morning. After rebounding off of its upper trend line, the index moved down towards the middle of its price channel, just above its pivot point at 162.56. Traders should watch for a move higher from its level towards its upper trend line or R1 resistance at 168.42 or a breakdown to S1 support and the 50-day moving average at around 159.81. Looking at technical indicators, the RSI is modestly overbought at 58.86 while the MACD experienced a bearish crossover.

The PowerShares QQQ (NASDAQ:QQQ) ETF fell 0.38% as of early trading on Friday morning. After rebounding off of its upper trend line, the index moved towards the lower trend line and pivot point at 86.70. Traders should watch for a rebound from this level back towards the upper trend line and R1 support at 89.35 or a move lower to its S1 support and 50-day moving average at around 84.85. Looking at technical indicators, the RSI remains relatively neutral at 54.95 while the MACD is well into a bearish crossover that could signal further downside ahead.

The iShares Russell 2000 (NYSE:IWM) ETF fell 0.25% as of early trading on Friday morning. After rebounding from its upper trend line, the index moved down towards the middle of its price channel, just above its pivot point at 113.41. Traders should watch fora rebound from its level towards its R1 resistance at 117.92 or a breakdown to test its lower trend line and 50-day moving average at around 111.58. Looking at technical indicators, the RSI remains modestly overbought at 59.54 while the MACD remains sideways, providing little insight into the future.

Summary

The major U.S. indices are largely in a bearish position with overbought RSIs and MACDs that have experienced a bearish crossover. Looking ahead towards next week, traders will be watching a number of key economic reports including retail sales on January 14th, jobless claims and the consumer price index on January 16th, and housing starts and industrial production on January 17th. Federal Reserve comments could also move the market during the coming week as the economic recovery continues to be relatively bumpy.

Charts courtesy of StockCharts.com.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

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