The major U.S. indices moved marginally higher this week, led by technology stocks and lagged by small-cap stocks. While the government shutdown made economic reports somewhat difficult to interpret, this week’s jobs report served as a reminder that the U.S. economy has a long road to recovery. The U.S. economy added 148,000 jobs in September and unemployment fell to 7.2%, but the labor force participation rate dropped again to levels last seen in the 1970s. But with the Federal Reserve prepared to keep rates low until at least 2014, many investors are looking forward to ongoing growth in corporate profits into next year.

Foreign markets were a little more mixed this week. Japan’s Nikkei 225 fell 3.25%, Britain’s FTSE 100 improved 1.48%, and Germany’s DAX 30 jumped 1.27%. While the eurozone has been showing signs of improvement, persistent unemployment has left it in much the same position as the United States. Asia isn’t faring much better either after the World Bank cut its forecast for growth in the region to 7.1% this year and 7.2% next year. These rates are down from prior forecasts of 7.6% growth this year and 7.8% next year.

The SPDR S&P 500 (ARCA:SPY) ETF rose 0.52% this week, as of early trading on Friday morning. After moving past its R1 resistance at 172.88, the index reached its upper trend line at around 176.00, below its R2 resistance at 177.74. Traders should watch for a breakout from these levels to the R2 resistance or a move back down to the R1 resistance next week. Looking at technical indicators, the RSI appears overbought at 66.60, suggesting possible profit taking, but the MACD remains firmly in a bullish up-trend that just barely appears to be moderating.

The PowerShares QQQ (NASDAQ:QQQ) ETF rose 0.95% this week, as of early trading on Friday morning. After jumping past its upper trend line at around 81.50, the index passed through R2 resistance at 82.14 to reach new all-time highs. Traders should watch for an extended rally towards the 90.00 mark or a retracement back to the R2 resistance to consolidate. Looking at technical indicators, the RSI appears overbought at 70.59 and poised for some consolidation, although the MACD continues to show a bullish trend firmly in place.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.83% this week, as of early trading on Friday morning. After extending its rally higher this week, the index lies just below R1 resistance at 155.89 and above its pivot point and 50-day moving average at around 151.25. Traders will be watching for a move past the R1 resistance to the upper trend line at around 158.00 on the upside or some consolidation above the support levels. Looking at technical indicators, the RSI appears only modestly overbought and the MCAD remains in an uptrend.

The iShares Russell 2000 Index (ARCA:IWM) ETF rose 0.28% this week, as of early trading on Friday morning. After moving past its R1 resistance at 109.44, the index is trading just below its upper trend line and R2 resistance at 112.27. Traders should watch for a breakout from these levels to set new highs or some consolidation within this channel. Looking at technical indicators, the RSI is modestly overbought with a reading of 66.04, while the MACD remains firmly in a bullish uptrend since the middle of this month.

The Bottom Line

The major U.S. indices moved higher this week, but remain below key breakout levels with mixed technical indicators. Next week, traders will be looking towards a number of reports to guide future direction, including the FOMC Minutes on October 30th that are expected to be a non-event, Jobless Claims on October 31st detailing employment improvements, and the ISM Manufacturing Index on November 1st, providing insights into a key job creator.

Charts courtesy of StockCharts.com.

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