Major U.S. indices moved higher during the shortened trading week as of Thursday’s close, despite revelations that the economy shrunk for the first time in three years during the first quarter of 2014. With many economists blaming the poor weather, investors will be closely watching for a strong finish to the year, including a recovery in inventories during the second quarter of 2014.

International markets followed U.S. markets higher throughout the week. Japan’s Nikkei 225 rose 0.7% higher; Britain’s FTSE 100 rose 0.81% higher; and Germany’s DAX 30 rose 1.75% as of Thursday’s close. In Europe, consumer morale and inflation expectations rose higher than expected in May. In Asia, China’s PMI is forecast to rise slightly in May, but Japan’s retail sales fell following its new tax.

The SPDR S&P 500 (ARCA:SPY) ETF rose 1.06% higher as of Thursday’s close. After touching the 50-day moving average, the index reached new highs and moved towards its upper trend line resistance. Traders should watch for a breakout from the upper trend line or a move below its 50-day moving average and lower trend line at 187.30. Looking at technical indicators, the RSI appears overbought at 65.80 but the MACD experienced a bullish crossover.

The SPDR S&P 500 (ARCA:SPY) ETF rose 1.06% higher, as of Thursday’s close.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.56% higher, as of Thursday’s close. After touching its 50-day moving average and lower trend line, the index rebounded to its upper trend line. Traders should watch for a breakout from these levels to new highs or a move lower to retest its lower trend line and 50-day moving average at 163.79. Looking at technical indicators, the RSI appears modestly overbought at 60.24 while the MACD remains neutral.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.56% higher, as of Thursday’s close.

The PowerShares QQQ (Nasdaq:QQQ) ETF rose 1.58% higher as of Thursday’s close. After breaking out from its 50-day moving average at 87.63, the index reached new highs near its upper trend line resistance. Traders should watch for a breakout from the upper trend line to new highs or a move lower to its 50-day moving average or lower trend line. Looking at technical indicators, the RSI appears overbought at 68.08 but the MACD remains in a bullish pattern.

The PowerShares QQQ (Nasdaq:QQQ) ETF rose 1.58% higher, as of Thursday’s close.

The iShares Russell 2000 (NYSE:IWM) ETF rose 1.25% higher as of Thursday’s close. After breaking out from its lower trend line, the index has consolidated near its 50-day moving average at 112.98. Traders should watch for a breakout from these levels or a move down to its lower trend line support just above 108.00. Looking at technical indicators, the RSI remains relatively neutral at 56.03 and the MACD recently experienced a bullish crossover.

The iShares Russell 2000 (NYSE:IWM) ETF rose 1.25% higher, as of Thursday’s close.

The Bottom Line

The major U.S. indices moved largely higher over the past week, although many appear top-heavy by the RSI’s measurement. Next week, traders will be watching a number of economic events, including the ISM Manufacturing Index on June 2nd, International Trade Report on June 4th, Jobless Claims on June 5th and the Employment Situation on June 6th.

Charts courtesy of StockCharts.com.

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