The major U.S. indices were mixed this week with moves restricted to less than 1% in either direction. While the week started on a decidedly negative note, indices recovered towards the end of the week, after Republican leaders backed away from their threat to freeze U.S. debt limits and proposed a six-week extension to avoid an October 17th default. Investors will be closely watching these debates into next week when a decision is likely to be made.
Foreign markets moved largely higher throughout the week. Japan’s Nikkei 225 jumped 2.71%, Britain’s FTSE 100 jumped 0.41%, and Germany’s DAX 30 jumped 0.99%, as of early trading on Friday morning. Eurozone economic indicators have been largely positive over the past week – although many key problems remain – while Japan saw its machine orders jump to its highest levels since the Lehman Brothers collapse sent global stocks lower in 2008.
The SPDR S&P 500 (ARCA: SPY) ETF rose 0.31% this week, as of early trading on Friday morning. After moving briefly below its lower trend line, pivot point, and 50-day moving average, the index bounced back towards the center of its trading range. Traders should watch for a move up to the R1 resistance at 172.88 or a move back down to the lower trend line support. Looking at technical indicators, the RSI remains relatively neutral with a reading of 54.01, while the MACD could experience a bullish crossover in the near-term after its bearish downtrend.
The PowerShares QQQ (NASDAQ: QQQ) ETF fell 0.67% this week, as of early trading on Friday morning. After moving below the pivot point to the 50-day moving average at 77.27, the index rebounded higher from both levels to the middle of its trading range. Traders should watch for a breakout from the upper trend line and R1 resistance at 80.51 or a move lower to retest the 50-day moving average or even S2 support at 73.69 on the downside. Looking at technical indicators, the RSI remains neutral and the MACD is firmly in a bearish downtrend.
The SPDR Dow Jones Industrial Average (ARCA: DIA) ETF rose 0.57% this week, as of early trading on Friday morning. After reaching its lower trend line at around 148.00, the index bounced back to its 50-day moving average at 151.35 this week. Traders should watch for a breakout above these levels to its R1 resistance at 156.06 or a move back down to retest the lower trend line and S1 support at 146.63. Looking at technical indicators, the RSI remains neutral at 50.66, while the MACD could be ready to experience a bullish crossover.
The iShares Russell 2000 Index (ARCA: IWM) ETF fell 0.59% this week, as of early trading on Friday morning. After moving below its pivot point to test the lower trend line and 50-day moving average at 104.17, the index removed to the middle of its price channel. Traders should watch for a breakout from the upper trend line and R1 resistance at around 109.44 or a move below its lower trend line and pivot point at 104.65. Looking at technical indicators, the RSI is neutral at 55.26 and the MACD remains in a bearish downtrend.
The Bottom Line
The major U.S. indices were mixed this week, as traders remain undecided about just how lawmakers will act on the debt ceiling. In addition to the results of these talks, traders will be watching a number of economic indicators next week, including consumer prices on October 16th, housing starts on October 17th, and jobless claims on the same day.
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.