The major U.S. indices moved largely lower this week, amid mixed earnings and concerns abroad. While many members of the S&P 500 beat analyst estimates this quarter, investors are concerned that the growth isn’t enough to justify the market’s recent rally. China’s plans to overhaul its industry has also led to concerns that the world’s second largest economy could slow down even further, dragging down global growth with it.
International indices moved lower this week on many of the same concerns, with Japan’s Nikkei 225 falling 3.15%, Britain’s FTSE 100 dropping 1.07%, and Germany’s DAX 30 declining 1.11%, as of early trading on Friday morning. While the eurozone saw some positive economic data earlier this week, the IMF called for additional action to be taken to resolve many of the problems and ultimate restore growth in the region.
SEE: Economic Indicators Tutorial
The SPDR S&P 500 (ARCA:SPY) ETF fell 0.83% so far this week, as of early trading on Friday morning. After moving off of its R2 pivot point at 169.81, the index is retesting its prior high trend line support at about 167.90. Traders should watch for a breakdown of this level to the R1 pivot point at 165.11 and 50-day moving average at around 164.14 or a less likely rebound to try and break through the R2 pivot point again. Looking at technical indicators, the index appears overbought and could see a bearish MACD cross-under.
The PowerShares QQQ (Nasdaq:QQQ) ETF rose 0.13% so far this week, as of early trading on Friday morning. After moving off of the R2 pivot point at 75.77, the index rests on prior trend line support at around 174.80. Traders should watch for a breakdown to the R1 pivot point resistance at 73.52 or a retest of the R2 pivot point on the upside. Looking at the relatively indecisive technical indicators, the RSI suggests the index is modestly overbought and the MACD is showing a potentially bearish cross-under pattern.
SEE: Using Technical Indicators To Develop Trading Strategies
The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF fell 0.75% so far this week, as of early trading on Friday morning. After retreating over the past couple weeks, the index trades between its R2 pivot point at 156.59 and R1 pivot point at 152.47. Traders should watch for a move down to the R1 pivot point or 50-day moving average at 151.63 on the downside or a rebound to retest the R2 pivot point and upper trend line on the upside. Looking at technical indicators, the RSI is relatively neutral and the MACD looks increasingly bearish.
The iShares Russell 2000 Index (ARCA:IWM) ETF fell 0.69% so far this week, as of early trading on Friday morning. After reversing from new highs earlier this month, the index has slowly been making its way down to its R2 pivot point at 102.40. Traders should watch for a likely continuation of this bearish downtrend and a move down to the R1 pivot point and prior highs at around 99.49 or a potential rebound higher to retest its upper trend line. The RSI suggests that the index is overbought, while the MACD appears to be ready for a bearish cross-under.
SEE: Momentum And The Relative Strength Index
The Bottom Line
The major U.S. indices moved largely lower this week, with technical indicators suggesting that declines will continue next week, or at least that sideways trading will take hold. Traders will be watching a number of important economic releases next week to gauge future market direction, including GDP and FOMC minutes on July 31st, jobless claims and ISM data on August 1st, and income and employment data on August 2nd.
At the time of writing, Justin Kuepper did not own shares in any of the funds mentioned in this article.
Charts courtesy of StockCharts.com