Market Summary For January 31, 2014

By Justin Kuepper | January 31, 2014 AAA

Major U.S. indices moved lower this week, led by the Dow Jones Industrial Average and lagged by the S&P 500 index. While the U.S. economy reported robust 3.2% growth during the fourth quarter, investors were preoccupied with trouble in emerging markets, like India, Turkey and South Africa, as well as falling inflation in the eurozone. A slowdown in global growth could put the brakes on the relatively strong U.S. recovery.

International markets fared worse than U.S. markets this week. Japan's Nikkei 225 fell 3.1%; Britain's FTSE 100 fell 2.3%; and, Germany's DAX 30 fell 1.16%. In Asia, investors remained concerned with capital outflows despite rising interest rates. In Europe, falling inflation suggested that the region's economy may not be quite as strong as the market had hoped.

The SPDR S&P 500 (ARCA:SPY) ETF fell 0.18% as of early trading on Friday morning. After breaking down from its trend line support, the index moved below its pivot point and S1 support to  new trend line support at around 176.00. Traders should watch for a rebound from this level towards its pivot point at 181.96 or a move lower to S2 support at 173.77. Looking at technical indicators, the MACD remains in a bearish downtrend although the RSI appears oversold with a reading of 40.81.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF fell 0.85%  as of early trading on Friday morning. After breaking below its lower trend line and 50-day moving average, the index settled at  new support at around 156.00. Traders should watch for a rebound from these levels towards its 50-day moving average at 160.99 or a move lower to S2 support at 153.61. Looking at technical indicators, the MACD remains in a bearish downtrend although the RSI appears oversold with a reading of 34.68.

The PowerShares QQQ (NASDAQ:QQQ) ETF fell 0.69% as of early trading on Friday morning. After breaking below its lower trend line and pivot point, the index settled near its S2 support at 85.18 and 50-day moving average. Traders should watch for a rebound from these levels towards its trend line resistance at 87.50 or a move down to S2 support at 82.39. Looking at technical indicators, the MACD remains in a bearish downtrend while the RSI is neutral with a reading of 46.62.

The iShares Russell 2000 (NYSE:IWM) ETF fell 0.73% as of early trading on Friday morning. After breaking below its trend line, the index settled at its S1 support and trend line at 110.85. Traders should watch for a rebound from this level towards its upper trend line and pivot point at 113.41 or a move down towards its S2 support at 106.34. Looking at technical indicators, the MACD remains in a downtrend and the RSI is relatively neutral with a reading of 44.77.

Summary

The major U.S. indices moved lower this week. MACD trends point to an ongoing decline, although RSI readings suggest that some indices may be oversold. Next week, traders will be watching a number of economic indicators including construction spending on February 3rd, manufacturing data on February 4th, and international trade data on February 6th. Traders will also be watching for any comments or signals from the U.S. federal reserve.

Charts courtesy of StockCharts.com

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