ChartAdvisor for May 9 2014

By Justin Kuepper | September 02, 2014 AAA

Major U.S. indices were mixed over the past week with the Dow Jones Industrial Average outperforming Nasdaq and small-cap stocks as of Thursday’s close. After the U.S. Federal Reserve’s decision to continue tapering at a rate of $10 billion per month, investors are caught between optimism about the U.S. economic recovery and the bearish prospects of higher interest rates in the near term. The latter has been at least delayed, however, judging by the latest FOMC minutes.

International markets were somewhat mixed over the past week. Britain’s FTSE 100 jumped 0.25%; Japan’s Nikkei 225 fell 2.03%; and Germany’s DAX 30 rose 0.54% over the past week, as of Thursday’s close. In Europe, investors remain concerned over developments in Ukraine, but the European Commission expects 1.6% growth in 2014. In Asia, China’s growth remains a key concern for investors with many experts predicting performance similar to last year’s lackluster turnout.

The SPDR S&P 500 (ARCA:SPY) ETF rose 0.45% over the past week, as of Thursday’s close. After rebounding in mid-April, the index trades just above its 50-day moving average in a potential rising wedge reversal pattern. Traders should watch for a breakdown below the lower trend line at around 184.00 for a reversal or a rebound above R1 resistance at 191.57 to break the pattern. Looking at technical indicators, both RSI and MACD appear to be relatively neutral.

The SPDR S&P 500 (ARCA:SPY) ETF rose 0.45% over the past week, as of Thursday’s close.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.76% over the past week, as of Thursday’s close. After rebounding in mid-April, the index remains trapped under a 166.00 resistance level above its 50-day moving average. Traders should watch for a breakout above these levels towards R1 resistance at 167.67 given the ascending triangle pattern or a move below 163.71 pivot point levels. Technical indicators are relatively neutral for both the RSI and MACD.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.76% over the past week, as of Thursday’s close.

The PowerShares QQQ (Nasdaq:QQQ) ETF fell 0.05% over the past week, as of Thursday’s close. After moving higher towards its 50-day moving average and upper trend line at 87.97, the index retraced below its pivot point at 86.78. Traders should watch for a move down to retest its S1 support at 83.89 given the descending triangle pattern or a potential breakout above its upper trend line. Looking at technical indicators, the RSI and MACD both appear relatively neutral.

The PowerShares QQQ (Nasdaq:QQQ) ETF fell 0.05% over the past week, as of Thursday’s close.

The iShares Russell 2000 (NYSE:IWM) ETF fell 1.09% over the past week, as of Thursday’s close. After barely reaching its pivot point at 113.04, the index moved lower to re-test its supper at around 109.00. Traders should watch for a breakdown from these levels towards its S2 support at 103.22 given the descending triangle pattern or a breakout higher from its upper trend line and pivot point. RSI appears to be oversold at 33.67, but MACD remains in a very bearish down trend.

The iShares Russell 2000 (NYSE:IWM) ETF fell 1.09% over the past week, as of Thursday’s close.

Summary

The major U.S. indices have sent somewhat mixed signals over the past week, with bullish patterns for SPY and DIA and bearish patterns for IWM and QQQ. Traders will be watching a number of key economic events next week, including retail sales on May 13th, producer prices on May 14th, jobless claims, consumer prices, and industrial production on May 15th, and housing starts on May 16th. Further guidance from the U.S. Federal Reserve will also be closely watched over the coming weeks.

Charts courtesy of StockCharts.com.

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