Major U.S. stock market indices moved higher this week, with the exception of the Russell 2000 index. With a favorable resolution to the Cyprus scare, investors pushed the markets back toward their all-time highs, but the outlook remains cloudy. Jobless claims inched higher unexpectedly on Friday, rising by 16,000 to 357,000 for the week ended March 23. Meanwhile, U.S. GDP data showed an anemic 0.4% growth rate due to government spending cuts, although this figure was higher than many economists were expecting for the period.

International indices moved largely lower this week. In Europe, Britain’s FTSE 100 fell nearly 1% and Germany’s DAX nearly 3% on worries about Cyprus. In Asia, Japan’s Nikkei 225 fell nearly 1.8% as investors took profits off the table, while Hong Kong’s Hang Seng moved about 1% lower amid some profit-taking of its own following ongoing concerns in China.

The SPDR S&P 500 (ARCA:SPY) ETF jumped 0.33% this week, as of early trading on Friday morning. Currently, the index trades just above key support levels at the 155.07 R2 pivot point and a lower trend line at roughly the same point. While sideways price action could indicate consolidation, traders may want to watch for a move down to at least a prior high of 153.00 before any significant move higher. Technical indicators aren’t particularly helpful either, with the RSI showing modest overbought conditions at 63.26 and the MACD at a turning point.

SEE: Using Pivot Points For Predictions

SPY consolidation

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF jumped 0.28% this week, as of early trading on Friday morning. Currently, the index trades within an upward-sloping price channel, with a lower trend line at around 143.14 and an upper trend line at around 147.50. Traders should watch for a bounce or breakdown from the lower trend line moving into next week for a sign of future price action, with downside support at the 50-day moving average of 140.44. Looking at technical indicators, the RSI appears overbought at 66.42, while the MACD remains in a bearish crossover at the moment.

SEE: Momentum And The Relative Strength Index

DIA  breakdown

The PowerShares QQQ (Nasdaq:QQQ) ETF jumped 0.51% this week, as of early trading on Friday morning. Currently, the index trades above a previous ascending triangle, with key support levels at the 68.10 R1 pivot point and prior highs trend line. With the sideways price action, traders should again watch for a potential pullback before any significant move higher, perhaps to the pivot point at 66.95. And again, technical indicators aren’t much help, with a neutral 58.80 RSI reading and an indecisive looking MACD reading.

QQQ pullback

The iShares Russell 2000 Index (ARCA:IWM) ETF fell 0.39% this week, as of early trading on Friday morning. Currently, the index is hovering right around its 94.27 R2 pivot point and trend line support at roughly the same level. Traders should watch for a potential break of this level down to the 92.25 R1 pivot point and prior high trend line. Technical indicators suggest that the index is overbought with an RSI of 64.47, while the MACD remains in a bearish down trend.

SEE: Retracement Or Reversal: Know The Difference

IWM down trend

The Bottom Line
The major U.S. indices appear to remain overbought, despite consolidation over the past couple weeks. Looking ahead, traders should watch several key economic reports for signs of weakness, including the ISM Manufacturing Index on April 1, Jobless Claims on April 4, and Employment Situation data on April 5. Of course, traders will also be closely watching the situation in Europe for any signs of distress, following the difficult decisions made by Cyprus’ government.

Charts courtesy of stockcharts.com

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

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