ChartAdvisor for Aug. 29, 2014

By Justin Kuepper | Updated August 29, 2014 AAA

Major U.S. indices moved higher over the past week, led by small-cap stocks in the Russell 2000 index, after the U.S. reported more favorable economic news. According to the Commerce Department, the U.S. economy rebounded stronger than initially believed during the second quarter. Gross domestic product reached an annualized rate of 4.2%, which topped the initial 4% estimate among economists.

International markets were mixed over the past week, as of mid-day trading on Friday afternoon. Japan’s Nikkei 225 fell 0.75%; Britain’s FTSE 100 rose 1.66%; and Germany’s DAX 30 rose 0.99%. In Europe, investors remain concerned over slowing inflation while terrorism remains a key geopolitical risk. In Asia, investors were concerned over Japan’s lackluster data despite Shinzo Abe’s stimulus program. (For related reading, see: ChartAdvisor for Aug. 22, 2014.)

The SPDR S&P 500 (SPY) ETF rose 0.6% higher over the past week as of mid-day trading on Friday. After rebounding from its S1 support at 191.02, the index topped out near its R2 resistance at 201.13. Traders should watch for a breakout from these levels towards its upper trend line or a move down to R1 support at 197.11. Looking at technical indicators, the RSI appears overbought at 67.15 but the MACD’s bullish uptrend has only recently begun to show signs of slowing. (For related reading, see: 4 Stocks Awaiting Strong Breakouts.)

ChartAdvisor

The SPDR Dow Jones Industrial Average (DIA) ETF rose 0.48% higher over the past week as of mid-day trading on Friday. After rebounding from S1 support at 163.05, the index rose to the upper portion of its trading channel before stalling. Traders should watch for a rally to R2 resistance at 172.78 or a move down to R1 support at 168.89 before a move higher. Looking at technical indicators, the RSI appears modestly overbought at 64.13 but the MACD remains in a bullish uptrend. (For related reading, see: Channeling: Charting A Path To Success.)

ChartAdvisor

The PowerShares QQQ (QQQ) ETF rose 0.63% higher over the past week as of mid-day trading on Friday. After briefly touching the 50-day moving average at 96.02, the index broke out past its R2 resistance at 99.27 in recent weeks. Traders should watch for an extended move higher or a move back down to consolidate near its R1 support at 97.14. Looking at the technical indicators, the RSI appears very overbought at 74.31, while the MACD appears to be topping out a bit. (For related reading, see: A Primer on the MACD.)

ChartAdvisor

The iShares Russell 2000 (IWM) ETF rose 1.07% higher over the past week as of mid-day trading on Friday. After surpassing its 50-day moving average at 114.97, the index nearly reached R1 resistance at 117.45 before turning down. Traders should watch for a breakout from R1 resistance to its upper trend line or a move down to its 50-day moving average to consolidate. Looking at technical indicators, the RSI appears pretty neutral while the MACD remains in a bullish uptrend. (For related reading, see: Bullish and Bearish MACD Crossovers.)

ChartAdvisor

The Bottom Line

The major U.S. indices mostly moved higher over the past week, driven by an improving U.S. economy. Next week, traders will be watching a number of key economic indicators including ISM manufacturing data on Sept. 2, international trade and jobless claims on Sept. 4, and employment data on Sept. 5. Of course, any actions by the Fed will also be watched closely.

Charts courtesy of StockCharts.com.

You May Also Like

Related Analysis
  1. SPY, lofty RSI, bullish MACD
    Chart Advisor

    ChartAdvisor for Aug. 22, 2014

  2. SPY, neutral RSI, bullish MACD
    Chart Advisor

    ChartAdvisor for Aug. 15, 2014

  3. SPY, neutral RSI, bearish MACD
    Chart Advisor

    ChartAdvisor for Aug. 8, 2014

  4. Chart Advisor

    ChartAdvisor for Aug. 1, 2014

  5. Stock Analysis

    GE to Acquire Oceaneering Product Line, Shares Gain Slightly - Analyst Blog

Trading Center