Major U.S. indices moved higher this week despite poor readings on some economic indicators. Harsh winter weather hurt factory output in January which slowed the production of cars and appliances while also dampening consumer spending. The Federal Reserve noted that production fell 8/10% last month which is the first drop since July and the steepest in several years. Consumer sentiment remained relatively unchanged although optimism was hampered by concerns about the economy.

International markets were mixed this week with Japan moving sharply lower and Europe moving higher. Japan's Nikkei 225 fell 4.03%; Britain's FTSE 100 jumped 1.4%; and Germany's DAX 30 rose 3.88% this past week. In Asia, investors are concerned over Japan's widening current account deficit as well as slowing growth in many emerging markets. In Europe, the first annual growth rate was seen since 2011 as the situation continued to improve, although laggards like France remain stagnant.

The SPDR S&P 500 (ARCA:SPY) ETF rose 2.18% this week as of mid-day trading on Friday afternoon. After rebounding from its S1 support at 175.06, the index moved past its pivot point and 50-day moving average to its R1 resistance at 183.12. Traders should watch for a breakout from this level to its trend line and R2 resistance at 188.06 or a move back down to consolidate at its pivot point and 50-day moving average at 180.93. Looking at technical indicators, the RSI is overbought at 60 although the MACD recently experienced a bullish crossover.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 2.04% this week as of mid-day trading on Friday afternoon. After rebounding from its S1 support and 200-day moving average at around 153.84, the index moved past its pivot point to its 50-day moving average at 160.58. Traders should watch for a breakout from this level towards its R1 resistance at 162.65 or a move back down to consolidate near its pivot point at 159.25. Looking at technical indicators, the RSI is modestly overbought at 56.65 but the MACD experienced a bullish crossover.

The PowerShares QQQ (NASDAQ:QQQ) ETF rose 2.66% this week as of mid-day trading on Friday afternoon. After rebounding from its S1 support at 84.35, the index moved past its pivot point and R1 resistance to trend line resistance at around 90.00. Traders should watch for a breakout from this level to R2 resistance at 90.92 or a move down to the pivot point and 50-day moving average at around 86.74. Looking at technical indicators, the RSI appears overbought at 63.96 although the MACD experienced a bullish crossover.

The iShares Russell 2000 (NYSE:IWM) ETF rose 2.71% this week as of mid-day trading on Friday afternoon. After briefly touching S2 support at 107.17, the index rose to its pivot point and 50-day moving average at around 113.00. Traders should watch for a breakout from these levels towards its trend line and R1 resistance at 116.01 or a move back down to S1 support at 109.66. Looking at technical indicators, the RSI appears modestly overbought at 54.44 while the MACD just experienced a bullish crossover.

Summary

The major U.S. indices moved largely higher this week, but high RSI readings could mean that a retracement is coming. Traders will be closely watching a number of economic indicators next week including FOMC minutes, housing starts, and the producer price index on February 19th; jobless claims, the consumer price index, and the Philadelphia Fed Survey on February 20th; and existing home sales data due out on February 21st.

Charts courtesy of StockCharts.com.

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