The U.S. markets moved higher this week amid renewed optimism surrounding the economy and job market. After moving lower last week, the market rebounded following the Federal Reserve’s ongoing commitment to buy assets into the middle of this year, as well as initial U.S. unemployment claims that fell sharply to an adjusted 346,000. The market now appears less concerned about March’s hiring slowdown, which helped fuel a move higher this week.
The global markets also moved higher on the week, led by Japan’s Nikkei 225 that soared more than 5% higher. With ongoing promises of easing from the Liberal Democratic Party, the Japanese stock market reached a new four-year high at a time when the rest of the world has slowed. Similar signs of optimism were seen in Europe, where Britain’s FTSE 100 and Germany’s DAX both moved higher on the week, despite ongoing concerns in the eurozone.
The S&P 500 SPDR (NYSE:SPY) ETF moved 2.27% higher to 158.29, as of early trading on Friday morning. Currently, the index trades in a price channel with an upper bound at around 160.00 and a lower bound around 155.00. Traders may see consolidation over the near term, as the index recently hit another all-time high. Looking at technical indicators, the Relative Strength Index appears overbought at 62.47, while the MACD recently experienced what could become a bullish crossover after somewhat of a downtrend since mid-March.
SEE: Momentum And The Relative Strength Index
The Dow Jones Industrial Average SPDR (NYSE:DIA) ETF moved 1.69% higher to 147.97, as of early trading on Friday morning. Currently, the index trades in a rising wedge pattern with an upper bound at the R2 pivot point resistance of 149.89 and a lower bound at about 146.00. As with the SPY index, traders may see some consolidation over the near term, while the chart pattern suggests a potential move downward. Looking at technical indicators, the RSI remains in overbought territory at 68.82 and the MACD may be starting a bullish crossover.
SEE: Technical Analysis: Support And Resistance
The PowerShares QQQ (Nasdaq:QQQ) ETF moved 3.18% higher to 69.59, as of early trading on Friday morning, outperforming the other major indices. Currently, the index trades in a price channel with an upper bound at the R1 pivot point resistance of 69.89 and a lower bound of about 67.50. After a strong rebound from the lower trend line, traders should watch for a breakout of the upper trend line next week. Looking at technical indicators, the RSI appears relatively neutral at 59.42, while the MACD just experienced a bullish crossover.
The iShares Russell 2000 Index (NYSE:IWM) ETF moved 2.43% higher to 93.20, as of early trading on Friday morning. Currently, the index trades just above its pivot point level of 92.70 after breaking down from a key trend line in early April. Traders should watch for the pivot point level to hold or a move down to its S1 pivot point support at 90.69, with upside capped by the R1 pivot point resistance and trend line at 96.45. Technical indicators remain neutral with the RSI standing at 52.84 and the MACD stabilizing after a significant bearish downtrend.
SEE: Support & Resistance Basics
The Bottom Line
The major U.S. indices moved larger higher this week, driven by ongoing asset purchases at the Federal Reserve and an improving employment situation. Next week, traders will be closely watching the consumer price index, housing starts and industrial production figures on April 16 and jobless claims and the Federal Reserve survey on April 18 for ongoing signs of improvement. But with markets already top heavy, traders might be wise to keep tight stops in the event of a retracement lower or profit taking in the near term.
Charts courtesy of StockCharts.com
At the time of writing, Justin Kuepper did not own any shares in any company mentioned in this article.