The major U.S. indices were mixed this week, as strength in housing and auto sales failed to offset weakness in many other areas of the economy. In the Federal Reserve’s Beige Book comments, regulators noted modest to moderate growth hurt by weak venture capital and IPO markets, Asia’s ongoing slowdown, and remaining slack in the labor market that held back wage growth throughout most of the United States, save for the tech sector.
International indices moved largely higher, but without much vigor. Japan’s Nikkei 225 jumped 1.96%, Britain’s FTSE 100 rose 1%, and Germany’s DAX 30 improved 1.24%. But, investors remain very concerned about slowing growth in China and ongoing issues with European banks that remain unwilling to lend. Investors will be closely watching these markets for signs of improvement, as they are key performance drivers in many areas of the U.S. economy.
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The SPDR S&P 500 (ARCA: SPY) ETF rose 0.76% this week, as of early trading on Friday morning. After briefly breaking through an upper trend line resistance, the index stands below R2 pivot point resistance at 169.81 and above R1 pivot point resistance at 165.11. Traders should watch for a break down to lower trend line support at the 50-day moving average of 163.58 or a breakout above the R2 pivot point resistance. Looking at technical indicators, the RSI remains at an overbought 65.85, while the MACD remains in a bullish crossover.
The PowerShares QQQ (NASDAQ: QQQ) ETF fell 0.89% this week, as of early trading on Friday morning. After breaking above prior trend line resistance at 74.50, the index briefly touched the R2 pivot point resistance at 75.77 before moving back down to the resistance-turned-support level. Traders should watch for a breakdown from this level to the 50-day moving average at 72.91 or a move above the R2 pivot point resistance to new highs. Looking at technical indicators, the RSI is moving out of overbought territory, while the MACD remains bullish.
The SPDR Dow Jones Industrial Average (ARCA: DIA) ETF rose 0.5% this week, as of early trading on Friday morning. After rising to prior trend line resistance at around 154.50, the index has stagnated and remains somewhat range bound between R1 and R2 pivot point resistance levels at 152.67 and 156.80, respectively. Traders should watch for a breakout above the R2 pivot point resistance level or a breakdown below the R1 pivot point support level. Looking at technical indicators, the RSI remains marginally oversold and the MACD remains bullish.
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The iShares Russell 2000 Index (ARCA: IWM) ETF rose 1.49% this week, as of early trading on Friday morning. After breaking above prior trend line resistance at around 100.00, the index has remained very strong moving beyond even the R2 pivot point resistance level of 102.40. Traders should watch for the some consolidation around the R2 pivot point resistance level before a further move higher or a move down to support at around 100.00. Looking at technical indicators, the RSI remains overbought and the MACD remains in a bullish pattern.
The Bottom Line
The major U.S. indices were largely mixed this week, with many of them remaining overbought, according to RSI indicators. Next week, traders will be watching a number of economic indicators, including existing home sales on July 22nd, new home sales on July 24th, jobless claims on July 25th, and durable goods on the same day. Of course, the Federal Reserve is also being watched closely for signs of future monetary policy actions.
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