The major U.S. indices moved lower this week, ahead of the long Memorial Day weekend. After reaching all-time highs last week, many traders attributed the sell-off to a combination of profit taking, U.S. Federal Reserve jitters and turbulence in foreign markets. However, the underlying economic data released this week remained strong, with April durable goods increasing a higher-than-expected 3.3% amid rising demand for aircraft and automobiles.

International indices moved largely lower during the week, too. The big surprise was Japan’s Nikkei 225, which experienced a breathtaking 7.3% single-day drop on Thursday. Other indices around the world followed the lead, with Britain’s FTSE 100 down 1%, Germany’s DAX down 1.1% and Australia’s ASX 200 down 3.8%. However, the eurozone saw some favorable economic data, including positive German sentiment and business confidence data.

The SPDR S&P 500 (NYSE:SPY) ETF fell 1.29%, as of early trading on Friday morning. After rallying to 52-week highs last week, the index fell to its R2 pivot point support at 163.82 on heavy volume. Traders should watch for consolidation at this level before a rebound, or a move lower to the R1 pivot point resistance at 161.75 or a lower trend line at around 160.00. Looking at technical indicators, the RSI moved off from overbought levels and the MACD appears ready to make a bearish crossover, indicating a potential long-term bearish downtrend.

SEE: Technical Analysis: Support And Resistance

The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF fell 0.5%, as of early trading on Friday morning. After reaching 52-week highs last week, the index retreated closer to its R2 pivot point resistance level at 150.99 on heavy volume. Traders should watch for an ongoing move lower to the R1 pivot point resistance and lower channel trend line at 149.30 before a move higher. Looking at technical indicators, the RSI has moved into neutral territory and the MACD appears ready to make a bearish crossover that could suggest a pending downtrend.

SEE: Momentum And The Relative Strength Index

The PowerShares QQQ (Nasdaq:QQQ) ETF fell 1.53%, as of early trading on Friday morning. After rallying to 52-week highs last week, the index fell below its R2 pivot point resistance at 73.29 on heavy volume. Traders should watch for a move down to the R1 pivot point resistance and support trend line at 72.01 before consolidation and a move higher. Looking at technical indicators, the RSI has moved off from overbought levels and the MACD has begun a bearish crossover that could suggest a long-term bearish downtrend.

The iShares Russell 2000 Index (NYSE:IWM) ETF fell 1.55%, as of early trading on Friday morning. After reaching new 52-week highs last week, the index rebounded off of its upper channel trend line at around 100.00 and is consolidating between its R1 and R2 pivot point resistance levels. Traders should watch for a break down to the 50-day moving average at 94.24 or a retest of the upper trend line at around 100 after some consolidation. Looking at technical indicators, the RSI moved into neutral territory and the MACD could be ready for a crossover.

SEE: Interpreting Support And Resistance Zones

The Bottom Line
The major U.S. indices moved lower this week, with a combination of profit taking, concerns about the Fed and weakness in international markets. Looking ahead, traders will be watching U.S. GDP figures and jobless claims due on May 30 and personal income and outlays data due out on May 31, as well as for any ongoing hints from the Fed for future direction.

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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