The U.S. markets moved lower this week after poor employment data took the market by surprise. According to the government’s latest figures, the U.S. economy added just 88,000 nonfarm jobs last month, which was sharply lower than the 200,000 expected increase. The market is growing increasingly concerned that the austerity drive in Washington is discouraging employers from hiring and may end up stealing momentum from the U.S. economic recovery.

Global markets didn’t fare much better on the whole. In Europe, Britain’s FTSE 100 fell 2.58%, and Germany’s DAX fell 3.28% this week. In Asia, the Nikkei 225 was boosted by more talks of monetary policy action, jumping 3.51%, while Hong Kong’s Hang Seng moved up around 1% during the week. Further turmoil in the United States could remove a key developed world growth story from the picture and slow global growth over the coming year.

The S&P 500 SPDR (NYSEARCA:SPY) ETF moved down 1.51% this week, falling to a key support level at around 154.00 and just above its 50-day moving average at 152.62. Traders should watch for a break of the 152.00 level on the downside, with the next support level being at the S2 pivot point at 147.32 and the 200-day moving average at 142.79. Technical indicators seem to confirm a potential downtrend or retracement before a move higher, with the MACD having experienced a bearish crossover and RSI remaining in neutral territory.

SEE: Trading The MACD Divergence

SPY bearish crossover

The Dow Jones Industrial Average SPDR (NYSEARCA:DIA) ETF moved down 0.62% this week, outperforming the other major U.S. indices. The index fell below a key support trend line and remains just above its pivot point level of 143.24. Traders should watch for a break of that 143.24 level, which could signal a move lower to support at the 50-day moving average of 141.34 or to trend line support at 140.00. Technical indicators appear to confirm the bearish outlook, with the MACD in a bearish crossover and RSI in neutral territory.

SEE: Momentum And The Relative Strength Index

DIA bearish crossover

The PowerShares QQQ (Nasdaq:QQQ) ETF moved down 2.06% this week, falling below a key trend line and its 50-day moving average at 67.76. Traders should watch for a move down to the next key support level at the 200-day moving average, after consolidation at the S1 pivot point support level at 67.22. Given the breakout from a rising wedge pattern, traders could see even greater downside to prior support at 62.00 long-term. Technical indicators seem to confirm the bearish trend, with the MACD in a bearish crossover and the RSI remaining in neutral territory.

QQQ breakout

The iShares Russell 2000 Index (NYSEARCA:IWM) ETF moved down 3.79% this week, making it the worst performing major U.S. index. After breaking below a key support trend line and its 50-day moving average, traders should watch for a move down to S2 pivot point support at 86.94 or even a move down to its 200-day moving average at 83.59. The index has outperformed most others over the past several quarters, making its retracement potentially more severe, with the MACD indicator confirming a sustained bullish downtrend.

SEE: Retracement Or Reversal: Know The Difference

IWM retracement

The Bottom Line
The major U.S. indices moved largely lower this week, due to concerns that the government’s new austerity outlook will cut job growth and stall the economic recovery. Looking ahead to next week, traders will be closely watching FOMC minutes on April 10, jobless claims on April 11 and then retail sales and producer price index data on April 12. In particular, jobless claims and retail sales should provide a lot of additional guidance on the health of the consumer.

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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