Major U.S. indices moved lower over the past week, as of Thursday’s close, driven by equity valuation concerns and turmoil in European banks. After the Dow Jones Industrial Average broke through 17,000 last week, traders have become increasingly worried about a near-term correction given lofty P/E ratios along with a questionable economy. Wage growth also remains weak at just 2% this year, which means that consumers aren’t feeling any healthier in the financial sense.

International markets followed the U.S. with lower yields over the past week. After Thursday’s U.S markets closed, Japan’s Nikkei 225 fell 1.6%; Britain’s FTSE 100 fell 2.82% and Germany’s DAX 30 fell 3.5%. In Europe, Germany expressed concerns over its second quarter performance given the crisis in Ukraine, while banking institutions in the region remain on unstable ground. In Asia, China’s growth rates picked up with GDP growth rates of 7.4% projected for 2014 and 7.6% projected in 2015.

The SPDR S&P 500 (SPY) ETF fell 0.96% over the past week, as of Thursday’s close. After reaching all-time highs earlier this month, the index moved lower to trade just above its pivot point at 194.42. Traders should watch for a rebound from these levels toward the R1 resistance at 197.80 or a move lower to strong support (S1, 50-day MA, trend line) at 192.02. Looking at technical indicators, the RSI and MACD both appear to be relatively neutral.

SPY RSI and MACD appear to be neutral

The SPDR Dow Jones Industrial Average (DIA) ETF fell 0.81% over the past week, as of Thursday’s close. After reaching new highs earlier this month, the index broke below its lower trend line towards its pivot point at 167.86. Traders should watch for a sustained move down towards S1 support at 166.29 or a rebound back up to its R1 resistance and trend line at 169.45. Looking at technical indicators, the RSI and MACD both appear to be trading at relatively neutral levels.

DIA, RSI and MACD appear to be neutral

The PowerShares QQQ (QQQ) ETF fell 1.03% over the past week, as of Thursday’s close. After reaching new highs earlier this month, the index fell sharply and moved toward its pivot point at 92.82. Traders should watch for a move down to these levels or even S1 support at 91.49 before major trend line support or a rebound to re-test its R1 resistance at 95.23. Looking at technical indicators, the RSI still appears overbought at 64.03 while the MACD appears relatively neutral.

QQQ, RSI appear to be overbought, MACD appear to be neutral

The iShares Russell 2000 (IWM) ETF fell 3.66% over the past week, as of Thursday’s close. After testing its prior highs, the index moved sharply lower below its pivot point at 115.83 to its 50-day moving average at 113.84. Traders should watch for a rebound from these levels back to its pivot point, or a move even lower towards its 200-day moving average at 112.36. Looking at technical indicators, the RSI looks modestly oversold but the MACD experienced a bearish crossover.

IWM, RSI overbought, MACD experienced bearish crossover


The major U.S. indices moved lower over the past week, as of Thursday’s close, although many of the high RSI readings moderated. Looking ahead, traders will be watching a number of key economic events over the coming week, including retail sales on July 15th, PPI and industrial production on July 16th, and jobless claims and housing on July 17th. Concerns over lofty equity valuations may also cast a shadow over any potential upside over the coming weeks.

Charts courtesy of

Related Articles
  1. Stock Analysis

    The Biggest Oil Producers in Asia

    Learn which Asian countries deliver the most crude oil to market, and discover what companies are the biggest producers in each country.
  2. Mutual Funds & ETFs

    Top 3 Japanese Bond ETFs

    Learn about the top three exchange-traded funds (ETFs) that invest in sovereign and corporate bonds issued by developed countries, including Japan.
  3. Stock Analysis

    The 5 Biggest Russian Oil Companies

    Discover the top Russian oil companies by production volume and find out more about their domestic and international business operations.
  4. Chart Advisor

    4 European Stocks to Consider Buying

    European companies, listed on US exchanges, that are providing buying opportunities right now.
  5. Savings

    Become Your Own Financial Advisor

    If you have some financial know-how, you don’t have to hire someone to advise you on investments. This tutorial will help you set goals – and get started.
  6. Investing Basics

    6 Reasons Hedge Funds Underperform

    Understand the hedge fund industry and why it has grown exponentially since 1995. Learn about the top six reasons why the industry underperforms.
  7. Chart Advisor

    ChartAdvisor for October 2 2015

    Weekly technical summary of the major U.S. indexes.
  8. Mutual Funds & ETFs

    Top Three Transportation ETFs

    These three transportation funds attract the majority of sector volume.
  9. Investing Basics

    Tops Tips for Trading ETFs

    A look at two different trading strategies for ETFs - one for investors and the other for active traders.
  10. Investing

    How Diversifying Can Help You Manage Market Mayhem

    The recent market volatility, while not unexpected, has certainly been hard for any investor to digest.
  1. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  2. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  3. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  4. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  5. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!