The major U.S. indices were mixed this week as modest improvements in employment numbers struggled to offset stagnant wages and a slightly higher unemployment rate. The nation's May jobs report showed 175,000 new jobs, but average earnings for private sector workers rose less than a penny to $23.89 per hour. Other economic indicators were generally positive, with consumer confidence increasing from 69.0 in April to 76.2 in May and U.S. home prices jumping 11% year over year in their biggest 12-month gains since April 2006.
International indices also moved largely lower this week, driven by further weakness in Japan's stock market. The Japanese Nikkei 225 extended its downturn by 6.5%, Britain's FTSE 100 fell 2.6% and Germany's DAX 30 fell 1.1% during the week. Some of this weakness has been driven by the European Central Bank (ECB), which cut its growth forecast for the eurozone to -0.6% this year and +1.1% next year, compared to a prior estimate of -0.5% last quarter. However, Mr. Draghi noted that the ECB stood ready to take further action, if necessary.
The SPDR S&P 500 (NYSE:SPY) ETF rose 0.52% this week, as of mid-day trading on Friday afternoon. After rebounding from the 50-day moving average and lower trend line at 160.77, the index moved just above its pivot point of 163.54 this week. Traders should watch for a breakout or breakdown from the aforementioned 160.77 support and an upper trend line and R1 pivot point resistance level at 168.98. Looking at technical indicators, the RSI has moderated with a reading of just 53.65 but the MACD remains in a bearish downtrend.
The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF rose 0.57% this week, as of mid-day trading on Friday afternoon. After testing the lower trend line and 50-day moving average at 148.90, the index jumped past the pivot point at 150.80 this week. Traders should watch for a breakout move toward the upper trend line at 157.50 or a move lower to retest the 50-day moving average at 148.80. Looking at technical indicators, the RSI has moderated to 54.27, while the MACD remains in a decidedly bearish downtrend.
The PowerShares QQQ (Nasdaq:QQQ) ETF fell 0.16% this week, as of mid-day trading on Friday afternoon. After a bearish downtrend, the index rebounded from a prior upper trend line at 72.00 to just above the pivot point of 72.82. Traders should watch for this rebound to continue toward the R1 pivot point resistance level of 75.38 or a re-test of the 72.00 level with possible downside to the 50-day moving average at 71.20 or lower trend line at 69.00. Looking at technical indicators, the RSI has moderated but the MCAD remains in a bearish downtrend.
The iShares Russell 2000 Index (NYSE:IWM) ETF rose 0.34% this week, as of mid-day trading on Friday afternoon. After rebounding from a 96.65 pivot point, the index remains between its upper trend line and R1 pivot point resistance at 101.53 and a lower trend line support at the S1 pivot point of 92.91. Looking at technical indicators, the RSI has moderated to 55.08 but the MACD remains in a bearish downward trend.
The Bottom Line
The major U.S. indices were mixed this week, as the threat of an end to QE programs has capped upside and mixed economic readings have encouraged volatility. Next week, traders will be watching several economic indicators, including jobless claims and retail sales on June 13 and the producer price index and industrial production on June 14.
Charts courtesy of StockCharts.com
At the time of writing, Justin Kuepper did not own any shares in any company mentioned in this article.