Major U.S. indices moved sharply lower last week, despite signs of an improving economy. According to the Department of Commerce, economic growth accelerated at a faster pace than expected (4%) during the second quarter. The Bureau of Labor Statistics’ jobs report also showed that the economy added 200,000 or more jobs for the sixth consecutive month, slightly below expectations.

International markets followed U.S. markets lower with the exception of certain Asian economies. Japan’s Nikkei 225 rose 0.45%; Germany’s DAX 30 fell 4.5%; and, Britain’s FTSE 100 fell 1.73% last week. In Europe, inflation fell to its lowest levels since the height of the financial crisis entering a “danger zone”. In Asia, China reported a rebound in manufacturing activity as global trade starts to revive. (For the previous week's ChartAdvisor, click here.)

The SPDR S&P 500 (SPY) ETF fell 2.58% lower last week. After breaking down through trendline support, the index moved below its 50-day moving average at 195.06 and towards its S1 support at 191.02. Traders should watch for an extended move downwards towards S2 support at 188.95 or a rebound to re-test its 50-day moving average and pivot point at around 195.06. Looking at technical indicators, the RSI appears oversold at 34.48 but the MACD remains bearish. (For related reading, see: A Primer on the MACD.)

The SPDR Dow Jones Industrial Average (DIA) ETF fell 2.61% lower last week. After breaking down through its trend line support and 50-day moving average at 168.22, the index moved near its S1 support at 163.34. Traders should watch for a breakdown from these levels towards its 200-day moving average and S2 support around 161.39 or a rebound back towards its 167.24 pivot point. Looking at technical indicators, the RSI appears oversold at 30.02 but the MACD remains in a bearish downtrend. (For related reading, see: Support and Resistance Basics.)

The PowerShares QQQ (QQQ) ETF fell 2.12% lower last week. After breaking down from its trend line support, the index reached towards its 50-day moving average at around 93.72. Traders should watch for a breakdown from these levels towards S2 support at 91.51 or a rebound to re-test R1 resistance at 97.14. Looking at technical indicators, the RSI appears neutral at 46.36 but the MACD recently experienced a bearish crossover. (For related reading, see: An Introduction to the Relative Strength Index.)

The iShares Russell 2000 (IWM) ETF fell 2.6% lower last week. After breaking below its 200-day moving average at 113.03, the index moved a bit closer to its trend line and S1 support at 107.99. Traders should watch for a move down to that S1 support and lower trend line level or a rebound higher to re-test its 200-day moving average levels. Looking at technical indicators, the RSI appears oversold at 33.40, but the MACD appears in a bearish downtrend. (For related reading, see: Bullish and Bearish MACD Crossovers.)

Summary

The major U.S. indices moved lower last week, despite an improvement in the U.S. economy. Next week, traders will be watching a number of key economic events, including international trade data on Aug. 6 and jobless claims on Aug. 7. Traders will also be keeping a watch on a struggling Eurozone economy and potential policy changes in the U.S.

Charts courtesy of StockCharts.com.

Related Articles
  1. Chart Advisor

    ChartAdvisor for July 25, 2014

    Weekly technical summary of the major U.S. indexes.
  2. Chart Advisor

    ChartAdvisor for July 17, 2014

    Weekly technical summary of the major U.S. indices.
  3. Chart Advisor

    ChartAdvisor for July 11 2014

    Weekly Technical Summary of the Major U.S. Indexes
  4. Chart Advisor

    ChartAdvisor For July 4, 2014

    The major U.S. indices moved higher on a positive jobs report, as traders await this week's pivotal reports.
  5. Economics

    What Qualifies as Full Employment?

    Full employment is an economic term describing a situation where all available labor resources are being utilized to their highest extent.
  6. Forex Education

    These Are The Best Hours To Trade the British Pound

    The best times to trade the British pound are centered around economic releases at 1:30 am, 2:00 am, 8:30 am and 10:00 am U.S. ET.
  7. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  9. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  10. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Surplus

    The amount of an asset or resource that exceeds the portion that ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. G.19 Report

    A monthly statistical report from the U.S. Federal Reserve that ...
  5. Factor Market

    A marketplace for the services of a factor of production.
  6. Tactical Trading

    A style of investing for the relatively short term based on anticipated ...
RELATED FAQS
  1. Is Argentina a developed country?

    Argentina is not a developed country. It has one of the strongest economies in South America or Central America and ranks ... Read Full Answer >>
  2. Is Brazil a developed country?

    Brazil is not a developed country. Though it has the largest economy in South America or Central America, Brazil is still ... Read Full Answer >>
  3. What is the difference between marginal utility and marginal value?

    Depending on the context, marginal utility and marginal value can describe the same thing. The key word for each is "marginal," ... Read Full Answer >>
  4. In economics, what is an index number?

    Economists often make comparisons between sets of data across time. For example, a macroeconomist might want to measure changes ... Read Full Answer >>
  5. What role does the agency problem play in the modern Health Care industry?

    Agency problems vary from health care system to health care system, and not all economists agree on the degree and desirability ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
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!