The U.S. stock market extended its rally higher this week, led by technology stocks and lagged by small-cap stocks. The market rallied due to a string of favorable economic indicators, including nonfarm payroll beating estimates on Friday. The trade deficit shrank 11% in March due to increasing domestic oil supplies; unemployment applications fell to a seasonally adjusted 324,000 last week; and productivity grew to a seasonally adjusted 0.7% annual rate in Q1 2013.
The SPDR S&P 500 (NYSE:SPY) ETF moved up 1.9% this week, as of mid-day Friday. Currently, the index trades below its new R1 pivot point resistance level of 161.75. Traders should watch for a breakout above 161.75 on high volume, with upside limits at the aforementioned R1 pivot point resistance level and the R2 pivot point resistance level of 163.82. Looking at the technical indicators, the MACD experienced a recent bullish crossover, while the RSI is slightly overbought with a reading of 60.17, as of Thursday’s trading session.
The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF moved up 1.7% this week, as of mid-day Friday. Currently, the index broke out a key point in an ascending triangle trading pattern, with an upper bound at around 148.25 and a lower bound at around 146.80. Traders should watch for the upside resistance at the R1 pivot point resistance of 149.72 and downside support at the 50-day moving average and S1 pivot point support of around 144.45. Technical indicators remain largely neutral, with a flat lined MACD and RSI of 59.83.
The PowerShares QQQ (Nasdaq:QQQ) ETF moved up 3.45% this week, as of mid-day Friday. Recently, the index broke out from a prior R1 pivot point resistance level and trend line resistance level at 70.00, and it’s now above R1 pivot point resistance at 72.01. Traders should watch for a break of this level to the R2 pivot point resistance level at 73.29 or a retracement to consolidate at the 70.00 level before a move higher. Looking at technical indicators, the MACD has made a strong bullish crossover, but the RSI is approaching overbought levels, with a reading of 64.05, as of Thursday’s trading session.
The iShares Russell 2000 Index (NYSE:IWM) ETF moved up 2.2% this week, as of mid-day Friday. Currently, the index is trading above a price channel, with an upper bound at around 94.45 and a lower bound at 88.90. Traders should watch for a break of either of these channels, with potential upside resistance at the R1 pivot point resistance of 96.07 and downside support at the S1 pivot point support of 87.16. Technical indicators also remain conflicted, with a modestly bullish MACD crossover and a modestly overbought RSI of 53.47.
The Bottom Line
The major U.S. indices moved larger higher this week, especially due to Friday's employment data. Traders should be watching a number of other reports due out next week, including U.S. jobless claims on May 9.
Charts courtesy of stockcharts.com
At the time of writing, Justin Kuepper did not own any shares in any company mentioned in this article.