The major U.S. indices moved higher this week, recovering some ground after last week’s surprise announcement by Federal Reserve Chairman Ben Bernanke. While business activity slowed more than expected in June, consumer sentiment came in better than many economists expected, with consumer confidence remaining at 84.1 in June from 84.5 in May. But, the big question mark remains the Federal Reserve that could begin reducing purchases in September.

International indices followed domestic indexes higher, with Japan’s Nikkei 225 jumping 3.38%, Germany’s DAX 30 rising 2.18%, and Britain’s FTSE 100 improving 1.62%, as of mid-day trading on Friday afternoon. The biggest story was Japan’s economy, which strengthened in May as industrial output and retail sales improved the move since December 2011, according to a report by Bloomberg, strengthening confidence in Shinzo Abe’s plan to end deflation.

The SPDR S&P 500 (ARCA:SPY) ETF rose 1.37% this week, as of mid-day trading on Friday afternoon. After moving up to the lower trend line resistance, the index failed to break through the key 50-day moving average of 161.63, trend line resistance at 162.50, and pivot point at 162.68. Traders should watch for a breakout of these levels to R1 pivot point resistance at 168.09 or a move back down to S1 pivot point support at 157.17. Looking at technical indicators, the MACD remains in a bearish downtrend, while the RSI is neutral with a reading of 49.34.

The PowerShares QQQ (NASDAQ:QQQ) ETF rose 1.28% this week, as of mid-day trading on Friday afternoon. After rebounding from lower trend line support at around 69.00, the index moved up to test the 50-day moving average at 71.92. Traders should watch for a retracement back down to the lower trend line or a move up to test upper trend line resistance and the pivot point at 72.59. Looking at technical indicators, the MACD remains in a solid downtrend, while the RSI appears to be in neutral territory with a reading of 47.15.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 1.46% this week, as of mid-day trading on Friday afternoon. After rebounding from S1 pivot point support at 146.16, the index retested the trend line resistance and pivot point level of 150.49. Traders should watch for a successful breakout above this key trend line or a move back down to the S1 pivot point support level. Looking at technical indicators, the MACD remains in a bearish downtrend, while the RSI remains in neutral territory at 49.69, suggesting a level of uncertainty.

The iShares Russell 2000 Index (ARCA:IWM) ETF rose 1.42% this week, as of mid-day trading on Friday afternoon. Currently, the index stands just above its pivot point at 96.65 and the 50-day moving average of 96.49, but remains in the middle of a price channel. Traders should watch for a move to either R1 pivot point resistance at 101.53 on the upside or S1 pivot point support at 92.91 on the downside. Looking at technical indicators, the MACD remains in a bearish downtrend, while the RSI stands at a neutral 52.05.

The Bottom Line

The major U.S. indices moved larger higher this week, but they remain in a precarious situation at the moment. Looking ahead, traders will be closely watching the ISM Manufacturing Index on July 1st, International Trade data on July 3rd, and several pieces of employment data coming out on July 5th. However, trading is expected to be lighter next week thanks to the Independence Day holiday in the United States, making important moves less likely. Charts courtesy of StockCharts.com

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