ChartAdvisor for July 11 2014

By Justin Kuepper | July 11, 2014 AAA

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

Summary

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 StockCharts.com.

You May Also Like

Related Analysis
  1. Stock Analysis

    Bear of the Day: Yandex (YNDX) - Bear of the Day

  2. Stock Analysis

    Bull of the Day: Seattle Genetics (SGEN) - Bull of the Day

  3. Stock Analysis

    Will DTE Energy Prosper from Economic Revival in Michigan? - Analyst Blog

  4. Stock Analysis

    Raytheon in $344M-FMS Deal for Logistics Support to Canada - Analyst Blog

  5. Stock Analysis

    TASER Body Cameras to be Used Widely by LA Police Force - Analyst Blog

Trading Center