The major U.S. indices moved lower this week, after the government shut down due to budget disagreements. While official government reports halted along with its shutdown, the ISM non-manufacturing index fell to a 3-month low of 54.4 shortly before the shutdown. Investors remain concerned that the shutdown will hurt confidence in the near-term, while a failure to make interest payments could jeopardize the national credit rating yet again.

Foreign markets followed domestic market lower this week. Japan’s Nikkei 225 fell 3.17%, Britain’s FTSE 100 fell 1.54%, and Germany’s DAX 30 fell 0.81% this week. While domestic confidence has been shaken, the eurozone reported a pickup in its service sector and retail sales, although unemployment remains stubbornly high at around 12%. In Japan, investors remain on edge regarding a proposed hike in sales tax, which could hurt consumption.

The SPDR S&P 500 (ARCA: SPY) ETF fell 0.98% this week, as of early trading on Friday morning. After reaching its upper trend line last month, the index fell to its 50-day moving average and pivot point at around 167.50. Traders should watch for a move down to its lower trend line at around 166.00 or a rebound higher to R1 resistance at 172.88 or its upper trend line. Looking at technical indicators, the RSI remains neutral with a reading of 49.55, while the MACD experienced a bearish crossover, suggesting further downside ahead.

The PowerShares QQQ (NASDAQ: QQQ) ETF fell 0.21% this week, as of early trading on Friday morning. After reaching a high earlier this month, the index fell marginally to near its pivot point at 77.91. Traders should watch for a break down to lower trend line at around 77.00 or a move higher to the upper trend line or R1 resistance at 80.51. Looking at technical indicators, the RSI remains marginally overbought with a reading of 59.77, while the MACD recently experienced a bearish crossover that could suggest some downside ahead.

The SPDR Dow Jones Industrial Average (ARCA: DIA) ETF fell 2.04% this week, as of early trading on Friday morning. After moving off of its upper trend line in mid-September, the index fell below its 50-day moving average and pivot point to near its lower trend line. Traders should watch for a move down to this lower trend line at around 148.00 or a rebound to R1 resistance at 156.06 or the upper trend line marginally higher. Looking at technical indicators, the RSI appears modestly oversold at 40.84, while the MACD is in a bearish down trend.

The iShares Russell 2000 Index (ARCA: IWM) ETF fell 0.41% this week, as of early trading on Friday morning. Currently, the index is trading sideways within a channel with an upper trend line at the R2 resistance of 112.27 and a lower trend line at around 104.00. Traders should watch for a move to either of these levels, while taking note of the 50-day moving average at 104.01, which adds support to the downside. Looking at technical indicators, the RSI remains slightly overbought at 58.90 and the MACD recently crossed over to the downside.

The Bottom Line
The major U.S. indices moved largely lower this week, driven by the ongoing government shutdown and potential missed interest payment ahead. After experiencing bearish MACD crossovers, many of these indices appear headed for further weakness. Next week, traders will be watching for a number of government reports (if available), including FOMC Minutes on October 9th, jobless claims on October 10th, and retail sales and PPI data on October 11th.

At the time of writing, Justin Kuepper did not own shares in any of the funds mentioned in this article.

Charts courtesy of

Related Articles
  1. Technical Indicators

    A Primer On The MACD

    Learn to trade in the direction of short-term momentum.
  2. Forex Strategies

    Trading Forex Trends With MACD And Moving Averages

    Although based on short-term trading, keeping the long-term picture in mind will help investors trade with the trend.
  3. Trading Systems & Software

    Applying The MACD Indicator With MetaTrader 4

    This guide shows how to use MetaTrader 4, a trading platform used for online trading in the forex, CFD and futures markets.
  4. Forex Education

    Trading The MACD Divergence

    Currency traders can use this method to avoid stop-order triggers before the real reversal.
  5. Forex Education

    Spotting Trend Reversals With MACD

    Knowing when trends are about to reverse is tricky business, but the MACD can help.
  6. Active Trading

    Candle Sheds More Light Than The MACD

    Read the case against this well-established indicator.
  7. Forex Education

    MACD And Stochastic: A Double-Cross Strategy

    Two indicators are usually better than one. Find out how this pairing can enhance your trading.
  8. Chart Advisor

    Bumpy Roads Ahead In Transportation

    Investors are keeping an eye on the transportation industry. We'll take a look at the trend direction and how to trade it.
  9. Investing

    How ETFs May Save You Thousands

    Being vigilant about the amount you pay and what you get for is important, but adding ETFs into the investment mix fits well with a value-seeking nature.
  10. Mutual Funds & ETFs

    3 Fixed Income ETFs in the Mining Sector

    Learn about the top three metals and mining exchange-traded funds (ETFs), and explore analyses of their characteristics and how investors can benefit from these ETFs.
  1. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  2. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  3. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  4. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  5. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

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!