The major U.S. indices moved higher this week led by the Dow Jones Industrial Average, despite mixed retail sales data and a critical U.S. Federal Reserve meeting next week. Many economists remain bullish on U.S. economic growth after August’s ISM manufacturing survey showed the fastest growth in two years, since these figures are strongly correlated with changes in GDP and the manufacturing sector is known for generating more jobs than other sectors.

Foreign markets followed the U.S. indices higher amid bullish news in the U.S. and eurozone, with Japan’s Nikkei 225 jumping 3.9%, Britain’s FTSE 100 jumping 0.3%, and Germany’s DAX 30 jumping about 2.5% this past week. While eurozone employment fell during the second quarter, the fall occurred at a slower pace suggesting improvements are being made. The region still faces a number of bearish trends, however, including its lackluster factory output for July.

The SPDR S&P 500 (ARCA:SPY) ETF rose 1.76% this past week, as of early trading on Friday. After rebounding above its 50-day moving average of 167.40, the index trades just above its resistance of 168.73 and within a well defined price channel. Traders should watch for a move to its upper trend line and resistance at 173.81 on the upside or down to the lower trend line and support at 160.81. Looking at technical indicators, the RSI remains modestly oversold at 61.10 while the MACD recently experienced a bullish crossover.

The PowerShares QQQ (NASDAQ:QQQ) ETF rose 1.13% this past week, as of early trading on Friday. After breaking out above resistance at 76.85, the index reached its resistance at 78.22 and remains within its price channel. Traders should watch for a breakout from the resistance and upper trend line on the upside or watch for a move down to the pivot point and 50-day moving average at 75.83 on the downside. Looking at technical indicators, the RSI is modestly overbought at 62.92 and the MACD crossed over to the upside.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 2.85% this past week, as of early trading on Friday. After breaking out from its pivot point at 150.35, the index moved up to its resistance at 153.34 before taking a break. Traders should watch for an extended move up to its upper trend line at 158.00 or a move back down to the pivot point or lower trend line at around 148.00. Looking at technical indicators, the RSI appears overbought at 64.83, while the MACD experienced a strong bullish crossover that suggest additional upside.

The iShares Russell 2000 Index (ARCA:IWM) ETF rose 1.86% this past week, as of early trading on Friday morning. After breaking out above its pivot point at 102.08 and resistance at 103.93, the index continues to trade near the middle of its price channel. Traders should watch for a move higher to the resistance at 107.47 or a move lower to support and lower trend line support at 98.54. Looking at technical indicators, the RSI remains neutral at 58.66 and the MACD recently experienced a bullish crossover that suggests further upside.

The Bottom Line

The major U.S. indices moved higher this week ahead of key U.S. Federal Reserve comments due out next week regarding the tapering of its bond buying program. Traders should keep an eye on key RSI levels that appear modestly overbought, but the overall trend appears to be bullish judging by all of the favorable MACD crossovers. Next week, traders will be watching a number of economic indicators, including industrial production on the 16th, CPI data on the 17th, housing and Fed data on the 18th, and jobless claims and home sales on the 19th.

Charts courtesy of StockCharts.com.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

Related Articles
  1. Chart Advisor

    Market Summary for September 6, 2013

    The major U.S. indices moved lower this week, after a lackluster jobs report sent shares lower on Friday morning.
  2. Chart Advisor

    Market Summary for August 30, 2013

    The major U.S. indices moved lower this week, but remain within long-term price channels. Traders should watch for breakouts or breakdowns from these price channels for the best opportunities.
  3. Chart Advisor

    Market Summary for July 19 2013

    The major U.S. indices were largely mixed this week, with many of them remaining overbought, according to RSI indicators.
  4. Chart Advisor

    Market Summary For July 12 2013

    The major U.S. indices moved larger higher this week, but traders should take note of the largely overbought RSI readings that suggest a pullback is coming.
  5. Chart Advisor

    Market Summary For June 28, 2013

    Weekly Market Summary of the Major U.S. Indices
  6. Chart Advisor

    Market Summary For June 21, 2013

    Check out our weekly summary of the major U.S. indices, with a little hint of technical analysis.
  7. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  8. Mutual Funds & ETFs

    ETFs Can Be Safe Investments, If Used Correctly

    Learn about how ETFs can be a safe investment option if you know which funds to choose, including the basics of both indexed and leveraged ETFs.
  9. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  10. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center