The U.S. markets moved sharply lower this week led by small-cap and technology stocks, with large caps performing considerably better on the whole. With the Conference Board’s index of leading indicators falling 0.1% in March, investors have begun to question just how much the sequestration will affect the economic recovery. Consumer confidence, housing permits and new orders for manufactured goods were responsible for most of the declines.

Global markets also took a breather this week, with most of them moving into negative territory for various reasons. Some highlights included: Japan’s Nikkei fell over 1% this week amid profit taking after its meteoric rise; Britain’s FTSE fell more than 1.5% even after likely avoiding a triple dip recession in the first quarter; and Germany’s DAX fell more than 3% amid ongoing uncertainty within the eurozone about future bailouts and their conditions.

The S&P 500’s SPDR (NYSE:SPY) ETF fell 2.64% this week by mid-day trading on Friday, making it the second best performing U.S. index this week. Currently, the index trades at the lower end of its long-term price channel, right near its 50-day moving average of 154.09, pivot point at 154.42 and its lower trend line. Traders should watch for a potential rebound to R1 pivot point resistance at 159.10 or a potential breakdown to S1 pivot point support at 151.99, S2 pivot point support at 147.32 or even a move down to the 200-day moving average at 144.05. Meanwhile, technical indicators remain bearish, with the MACD in a bearish crossover.

SEE: Technical Analysis: Support And Resistance



The Dow Jones Industrial Average SPDR (NYSE:DIA) ETF fell 1.88% this week by mid-day trading on Friday, making it the best performing major U.S. index this week. Recently, the index broke down through a key trend line support level and remains on its way toward a second trend line support at around 141.00, standing just above its 50-day moving average of 143.11 and pivot point at 143.24. Traders should watch for a potential rebound back to the R1 pivot point resistance at 147.61 or a break down to S1 pivot point support at 140.69. Meanwhile, technical indicators remain bearish, with the MACD in a bearish crossover.

SEE: Support & Resistance Basics



The PowerShares QQQ (Nasdaq:QQQ) ETF fell 3.6% this week by mid-day trading on Friday, making it the second worst performing U.S. index this week. Recently, the index broke down through its 50-day moving average at 68.15 and a key trend line support level, and then rebounded off of its S1 pivot point support at 67.22, standing now near its pivot point level at around 67.22. Traders should watch for a continued rebound to trend line resistance at around 69.00 or a move down to its 200-day moving average at 66.38. Meanwhile, technical indicators remain mixed, with a relatively neutral RSI and MACD that’s in a bearish crossover.



The iShares Russell 2000 Index (NYSE:IWM) ETF fell 4.08% this week by mid-day trading on Friday, making it the worst performing U.S. index this week. Recently, the index broke down through its 50-day moving average at 92.06 and its S1 pivot point support at 90.69, standing now near that level on the downside. Traders should watch for a breakdown further to S2 pivot point support at 86.94 or a rebound to retest the 50-day moving average at 92.06. Technical indicators also remain mixed with a neutral RSI and bearish MACD reading.

SEE: Momentum And The Relative Strength Index



The Bottom Line
The major U.S. indices moved lower this week, as economic fundamentals weakened. The sequestration remains a major uncertainty, with any agreement on a repeal potentially sending the markets higher. Looking forward, traders will be watching existing home sales on April 22, new home sales on April 23, durable goods on April 24, jobless claims on April 25 and GDP figures on April 26 for signs of future directions for the U.S. economy.

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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