The major U.S. indices moved largely higher this week, led by the NASDAQ and lagged by the Dow Jones Industrial Average. Favorable employment data started the week off on solid footing, while Federal Reserve Chairman Ben Bernanke’s comments helped hold stocks higher towards the end of the week. However, investors remained concerned about an ongoing slowdown in China, as well as bearish data from companies like United Parcel Service.
International indices were somewhat mixed this week. Britain’s FTSE 100 jumped 2.8%, Germany’s DAX 30 jumped 5.2%, and Japan’s Nikkei 225 rose 1.4%, rounding out the week on a largely higher note. But, concerns about China’s slowdown could also have an impact on these markets over the coming weeks. China’s Xinhua 25 index rose this week modestly, but remains down about 17.8% since the beginning of the year amid these bearish trends.

SEE: The Advantage Of Intermarket Analysis

The SPDR S&P 500 (ARCA:SPY) ETF rose 2.31%, as of early trading on Friday morning. After rebounding from lower trend line support at 161.00 and breaking through R1 pivot point resistance at 165.11, the index moved up to test a prior high at 168.00 this week. Traders should watch for a break of this key level on the upside or a move back down to the R1 pivot point or 50-day moving average of 162.85 on the downside. Looking at technical indicators, the RSI appears overbought at 65.08, while the MACD remains in a bullish crossover.

The PowerShares QQQ (NASDAQ:QQQ) ETF rose 2.87%, as of early trading on Friday morning. After breaking above R1 pivot point resistance at 73.52 and a prior high of around 74.80, index remains just above the key support and below R2 pivot point resistance at 75.77. Traders should watch for a move higher to the R2 pivot point resistance or a break down to R1 pivot point resistance or the 50-day moving average at 72.57. Looking at technical indicators, the RSI has become overbought at 68.61, while the MACD remains in a bullish crossover trend.

SEE: Spotting Trend Reversals With The MACD

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 1.97%, as of early trading on Friday morning. After rebounding from lower trend line support and the 50-day moving average of 150.80, the index stands near prior highs at around 154.50 and below R2 pivot point resistance at around 156.80. Traders should watch for a breakout to this R2 pivot point resistance or a break back down to the R1 pivot point resistance. Looking at technical indicators, the RSI appears overbought at 62.84 and the MACD remains in a bullish crossover.

The iShares Russell 2000 Index (ARCA:IWM) ETF rose 2.97%, as of early trading on Friday morning. After rebounding from its 50-day moving average at 97.52 and a lower trend line, the index moved past prior highs at 100.00 and trade near its R2 pivot point resistance at 102.40. Traders should watch for a breakout higher or a move back down to the 100.00 prior resistance trend line. Looking at technical indicators, the RSI appears overbought at 69.68 and the MACD remains in a bullish crossover pattern.

SEE: Identifying Market Trends

The Bottom Line
The major U.S. indices moved larger higher this week, but traders should take note of the largely overbought RSI readings that suggest a pullback is coming. Next week, traders will be watching numerous economic indicators, including retail sales on the 15th, industrial production and CPI on the 16th, housing starts on the 17th, and jobless claims on the 18th. Earnings season is also well underway with several big names set to report next week.

Charts courtesy of StockCharts.com

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