The U.S. markets moved largely higher this week, bolstered by higher-than-expected consumer spending, faster-than-expected employment growth, an ongoing rebound in the housing market and ongoing bullish momentum. With the Russell 2000 leading the group with a 1.18% gain, the Dow Jones followed with a 0.70% gain, the S&P 500 jumped 0.32% and the NASDAQ fell by a modest 0.23% for the week, as of mid-session on Friday afternoon.

Global markets followed the U.S. markets higher, for the most part. Japan’s Nikkei 225 rose 2.26% on the week, strengthened by a weaker yen and favorable new BOJ leadership. Germany’s DAX rose 0.5% and Britain’s FTSE 100 etched out a 0.7% gain, despite some negative economic news out of the eurozone and Britain over the past week. And China’s Xinhua 25 extended its move lower as investors continue to sell Chinese stocks.

The S&P 500 SPDR (ARCA:SPY) ETF moved 0.32% higher this week, but looks to close on a bearish note as traders take profit off the table and ETFs show outflows. Hovering around its R2 pivot point resistance at 155.76, the index could break lower to its R1 pivot point support level and trend line support at around 153.60. With a high RSI reading of around 65.04 and a potential bearish MACD crossover in the works, traders may want to watch for consolidation at this 155.76 level before another move higher materializes over the coming weeks.
SEE: Technical Analysis: Support And Resistance
 
SPY uptrend

The Dow Jones Industrial Average SPDR (ARCA:DIA) ETF moved 0.70% higher this week, but looks to close on a bearish note alongside the other major U.S. indexes. After breaking through its R2 pivot point resistance level at 143.44, the index appears to be moving back down to those levels. Traders should watch for a break of this level down to R1 pivot point support at 141.86 or even down to its 139.73 pivot point and key trend line support, given its overbought RSI reading of 71.84 and a potential bearish MACD crossover in the works.
SEE: Momentum And The Relative Strength Index
 
DIA uptrend

The PowerShares QQQ (Nasdaq:QQQ) ETF extended its move downward this week, with a 0.23% loss compared to gains across other U.S. indexes. After breaking through R1 pivot point resistance at 68.25, the index has flat lined over the past couple weeks on relatively low volume by historical standards. Traders should watch for a break down below this 68.25 level or a break up through the R2 pivot point resistance at 69.41. But long term, the index remains range-bound in a channel with a 70.00 upper limit and a 67.40 lower limit.

QQQ uptrend

The iShares Russell 2000 Index (ARCA:IWM) ETF led the other major indexes with a solid 1.18% rise, extending a robust rally that began in mid-November of last year. Edging above its R2 pivot point resistance at 94.54, traders will be watching for this level to hold or a potential consolidation down to key support at a major trend line and R1 pivot point support at 92.51. RSI readings of around 72.39 suggest that such a consolidation is a good possibility, but the MACD remains in what appears to be a very robust bullish up-trend.
SEE: Support & Resistance Basics
 
IWM uptrend

The Bottom Line
U.S. indices moved largely higher this week due to strong economic data and momentum, but traders should be mindful of potential downside. Many ETFs are beginning to see strong outflows, suggesting that investors are locking in profits, while increases in government spending from the sequestration could put a halt to some growth. Looking ahead, traders will be watching housing starts data on March 19 and existing home sales and jobless claims on March 21 for clues about the future direction of the market.

Charts courtesy of stockcharts.com

At the time of writing, Justin Kuepper did not own any shares in any company mentioned in this article.

Related Articles
  1. Forex Education

    Technical Analysis Works In Forex Markets

    Technical analysis is a hotly debated topic. Discover evidence showing that it works in forex markets.
  2. Forex Education

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  3. Active Trading Fundamentals

    Finding Short Candidates With Technical Analysis

    Learn how to distinguish tops and bottoms in the equity market when short selling.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares 10-20 Year Treasury Bond

    Learn about the iShares 1-20 Year Treasury Bond ETF and its holdings, and understand why investors may be better served to look at other bond funds.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Global Telecom

    Learn about the iShares Global Telecom exchange-traded fund, which invests in U.S. and foreign telecommunication companies with high dividend yields.
  6. Chart Advisor

    Gold Struggles to Climb Higher and May Fall Soon

    Traders will be watching the price of gold over the coming weeks. We'll take a look at how a couple major moving averages are suggesting that the next move could be lower.
  7. Technical Indicators

    Use Market Volume Data to Determine a Bottom

    Market bottoms often carve out classic volume patterns that let observant traders make fast and accurate calls.
  8. Mutual Funds & ETFs

    ETF Analysis: United States Brent Oil Fund

    Learn more about the United States Brent Oil exchange-traded fund, the characteristics of the fund and the suitability and recommendations of it.
  9. Mutual Funds & ETFs

    ETF Analysis: ProShares Ultra Bloomberg Crude Oil

    Find out more about the ProShares Ultra Bloomberg Crude Oil ETF, the characteristics of UCO and the suitability and recommendations of UCO for investors.
  10. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Middle Market

    Definition of middle market
  3. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
  4. Precedent Transaction Analysis

    A valuation method in which the prices paid for similar companies ...
  5. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  6. Fintech

    Fintech is a portmanteau of financial technology that describes ...
RELATED FAQS
  1. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  2. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  3. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!