The major U.S. indices were mixed this week, with the NASDAQ rising 1.6% and the DJIA falling 0.6%, as of early trading on Friday. After a rough start due to weak retail earnings and hawkish Federal Reserve comments, U.S. jobless claims moving to a 6-year low and improvements in U.S. manufacturing activity helped the market regain confidence. The improvements in the economy prompted speculation that the Fed would begin reducing bond purchases in September.
Foreign markets moved largely higher during the week, with Japan’s Nikkei 225 jumping 0.1%, Britain’s FTSE 100 rising 0.2%, and Germany’s DAX 30 moving up 0.25%, as of early trading on Friday morning. Economic activity in the eurozone reached its highest level in more than two years this month, with growth in manufacturing and corporate purchasing. Last week, official data showed that the region finally exited recession during the second quarter.
SEE: How The Federal Reserve Manages Money Supply
The SPDR S&P 500 (ARCA: SPY) ETF rose 0.38% this week, as of early trading on Friday morning. After falling below its 50-day moving average of 165.88 last week, the index appears to have modestly rebounded and now lies at a key pivot point of 166.26. Traders should watch for a break higher towards upper trend line and R1 resistance at 173.31 or a move lower to S1 support at around 162.67 or a lower trend line at 160.00. Looking at technical indicators, the RSI remains at a neutral 45.18 and the MACD remains in a bearish crossover.
The PowerShares QQQ (NASDAQ: QQQ) ETF rose 1.58% this week, as of early trading on Friday morning. After a modest fall last week, the index continues to trade between its R1 resistance and upper trend line at 77.54 and its pivot point and trend line support at 74.44. Traders should watch for a breakout of either of these levels to R2 resistance at 79.30 on the upside or lower trend line and S1 support at 72.68 on the downside. Looking at technical indicators, the RSI remains neutral at 58.77 and the MACD remains in a bearish crossover.
SEE: Using Pivot Points For Predictions
The SPDR Dow Jones Industrial Average (ARCA: DIA) ETF fell 0.56% this week, as of early trading on Friday morning. After falling below its 50-day moving average of 151.90, the index trades around its S1 support at 149.54. Traders should watch for a rebound from these levels or a lower trend line at around 147.50 back to the 50-day moving average or a breakdown from that trend line to S2 support at 144.63. Looking at technical indicators, the RSI appears oversold at 33.03, while the MACD remains in a bearish downtrend.
The iShares Russell 2000 Index (ARCA: IWM) ETF rose 1.27% this week, as of early trading on Friday morning. After briefly falling to its 50-day moving average of 101.45, the index rebounded past its 101.95 pivot point and trades between two key trend lines. Traders should watch for a move to R1 resistance of 106.69 on the upside or lower trend line and S1 support of 98.92 on the downside. Looking at technical indicators, the RSI remains neutral at 49.10, while the MACD remains in a bearish downward trend dating back to late-July.
SEE: Technical Analysis – Indicators And Oscillators
The Bottom Line
The major U.S. indices were mixed this week, with many of them lying at critical support levels. Traders will be watching for further hints of Federal Reserve action, as well as keeping an eye on numerous economic indicators out next week. These indicators include durable goods on August 26th, GDP and jobless claims on August 29th, and personal income and outlays on August 30th.
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.