Chart Advisor for March 6 2014

By Justin Kuepper | September 02, 2014 AAA

Major U.S. indices moved largely higher this week, as stocks rebounded from last week's Ukraine-driven drop. While the situation has yet to be resolved, fears of a civil war have subsided for now. The U.S. Federal Reserve's Beige Book also helped calm investors' nerves by confirming that the economic slowdown in January and February was mostly due to "unusually severe weather" and business contacts remain upbeat.

International markets were largely mixed this week. Japan's Nikkei 225 rose 2.55%; Britain's FTSE 100 fell 0.31%; and Germany's DAX 30 fell 1.54%. In Asia, Chinese manufacturing activity fell in February while Japan's factory output increased, although investors remain concerned over the country's pending tax hike. In Europe, economic data showed the eurozone was gaining traction ahead of the Ukraine crisis.

The SPDR S&P 500 (ARCA:SPY) ETF rose 1.03% ahead of Friday's session. After surpassing last month's R2 resistance, the index rose closer to its new R1 resistance at 191.06 and upper trend line at 194.00. Traders should watch for a move towards the upper trend line and R2 resistance at 195.82 or a retracement back down to its pivot point and 50-day moving average at 182.56. Looking at technical indicators, the RSI appears overbought at 67.76 while MACD remains bullish.

The SPDR S&P 500 (ARCA:SPY) ETF rose 1.03% ahead of Friday's session.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.66% ahead of Friday's session. After surpassing its prior R1 resistance, the index moved towards its new R1 resistance at 166.96 near the middle of its price channel. Traders should watch for a move to the R1 resistance on the upside or a retracement to its 50-day moving average at 161.04 to consolidate before a move higher. Looking at technical indicators, the RSI appears mildly overbought at 63.63 while the MACD remains in a slightly waning bullish uptrend.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.66%  ahead of Friday's session.

The PowerShares QQQ (Nasdaq:QQQ) ETF rose 0.71% ahead of Friday's session. After rising past its prior R2 resistance, the index moved towards its upper trend line and R1 resistance at 93.07 towards the upper end of its price channel. Traders should watch for a breakout to these levels or a move down to consolidate near its pivot point at 88.23. Looking at technical indicators, the RSI appears overbought at 65.67 while the MACD appears to be in a waning bullish uptrend.

The PowerShares QQQ (Nasdaq:QQQ) ETF rose 0.71% ahead of Friday's session.

The iShares Russell 2000 (NYSE:IWM) ETF rose 1.88% ahead of Friday's session. After briefly surpassing its prior R2 resistance, the index sits just below its upper trend line and R2 resistance at 121.73. Traders should watch for a breakout from these levels to R2 resistance at 125.94 or a move down to consolidate near its pivot point and 50-day moving average at 114.58. Looking at technical indicators, the RSI appears overbought at 68.34 while the MACD remains very bullish.

The iShares Russell 2000 (NYSE:IWM) ETF rose 1.88% ahead of Friday's session.

Summary

The major U.S. indices moved largely higher this week, particularly in small-caps. However, many of the major indices have RSI readings that suggest a correction may be overdue with a few MACD readings confirming early signs of weakness. Next week, traders will be watching a number of economic indicators, including jobless claims and retail sales on March 13th and the producer price index on March 14th. Of course, the situation in Ukraine will also be in the forefront over the coming week.

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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