The major U.S. indices moved largely lower this week, with the exception of small-cap stocks in the Russell 2000. Recent economic data has painted a mixed picture for the U.S. economy, with fewer jobless claims and falling home sales. But, it’s another looming government shutdown that has the markets on edge this week. Economists project that the shutdown could reduce fourth quarter growth by as much as 1.4%, depending on its length.
Foreign markets were also mixed this week on conflicting news. Japan’s Nikkei 225 jumped 2.47%, Germany’s DAX 30 fell 0.47%, and the Britain’s FTSE 100 fell 1.51%, as of early trading on Friday morning. In Britain, Mark Carney ended quantitative easing programs for the time being, sending stocks lower and currencies higher. Confidence in the eurozone economy has also reached a two year high, although growth remains on the weak side.
The SPDR S&P 500 (ARCA: SPY) ETF fell 1.13%, as of early trading on Friday morning. After falling from its upper trend line and R2 resistance at 172.97, the index is nearing its R1 resistance at 167.91 and 50-day moving average at 167.49. Traders should watch for a rebound from these levels to re-test R2 resistance or a move down to the pivot point and lower trend line at 165.09. Looking at technical indicators, the RSI remains neutral at 52.98, while the MACD looks like it may be ready for a bearish crossover in the near-term.
The PowerShares QQQ (NASDAQ: QQQ) ETF fell 0.06%, as of early trading on Friday morning. After breaking through its R2 resistance at 77.99, the index moved off of its highs and appears to be in a bearish rising wedge pattern. Traders should watch for a move below R2 resistance and its lower trend line or a re-test of its highs. Looking at technical indicators, the RSI appears to be overbought at 66.35 and the MACD could be ready for a bearish crossover. These indicators seem to suggest that the index could move lower in the near-term.
The SPDR Dow Jones Industrial Average (ARCA: DIA) ETF fell 1.46%, as of early trading on Friday morning. After moving off its upper trend line at around 157.00, the index moved below R1 resistance to its 50-day moving average at 152.24 where it has stabilized. Traders should watch for a rebound from these levels to re-test the upper trend line or a move down to the pivot point at 150.06. Looking at technical indicators, the RSI appears relatively neutral at 29.20, while the MACD appears ready for a bearish crossover in the near-term.
The iShares Russell 2000 Index (ARCA: IWM) ETF rose 0.02%, as of early trading on Friday morning. After reaching its upper trend line and R2 resistance at 107.19, the index has traded sideways throughout the week in a holding pattern. Traders should watch for a breakout from these levels or a move down to R1 resistance and the 50-day moving average at 103.72. Looking at technical indicators, the RSI appears overbought at 65.47, while the MACD’s bullish trend appears to be slowing over the past couple weeks.
The Bottom Line
The major U.S. indices moved largely lower this week, while technical indicators seem to suggest that the bearish trends will continue. Next week, traders will be closely watching for a government shutdown, with a decision that must be made by October 17th. Traders will also be watching for a number of economic indicators coming up, including the ISM Manufacturing Index on October 1st, Jobless Claims on October 3rd, and Employment Data on October 4th.
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.