The major U.S. indices moved lower this week with tech stocks being the top performers and small-cap stocks being the worst performers. Many economic indicators came in better than expected, including retail sales that increased a solid 0.7% in November. However, investors have grown wary of the U.S. Federal Reserve ending its stimulus programs after equity indices reach record highs; higher interest rates could quickly curb the market’s breakneck gains.

International markets ended the week on a mixed note. Japan’s Nikkei 225 gained 0.67%; Britain’s FTSE 100 lost 1.70%; and, Germany’s DAX 30 lost 1.78% this week. In the eurozone, industrial output fell unexpectedly by 1.1% in October compared to September which suggests weak demand from businesses and consumers. In Asia, investors are eyeing Shinzo Abe’s plans for Japan but remain on edge regarding the potential for U.S. tapering.

The SPDR S&P 500 (ARCA:SPY) ETF fell 1.56% lower as of early trading on Friday morning. After briefly retesting its highs, the index fell sharply below its pivot point and towards its S1 support and 50-day moving average at around 176.34. Traders should watch for a breakdown from these levels to S2 support at 172.18 or a move back up to the upper trend line and R1 resistance at 183.58. Looking at technical indicators, the RSI appears modestly oversold with a reading of 46.55 but the MACD remains in a decidedly bearish downtrend.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF fell 1.62% lower as of early trading on Friday morning. After reaching new highs in November, the index fell below its key trend line support and pivot point at around 158.96. Traders should watch for a break down below the S1 support and 50-day moving average at around 156.13 or a move back higher to retest the upper trend line and pivot point. Looking at technical indicators, the RSI appears modestly oversold at 46.18 but the MACD remains in a very bearish downtrend.

The PowerShares QQQ (NASDAQ:QQQ) ETF fell 1.12% lower as of early trading on Friday morning. After nearly reaching its R2 resistance at 87.26, the index fell from its upper trend line to the middle of its price channel near its pivot point at 84.31. Traders should watch for a breakdown to its lower trend line and S1 support at 82.80 or a rebound higher to retest the upper trend line and R2 resistance. Looking at technical indicators, the RSI has moved into neutral territory with a 56.41 reading and the MACD experienced a modest bearish crossover.

The iShares Russell 2000 (NYSE:IWM) ETF fell 2.39% lower as of early trading on Friday morning. After making a modest recovery in early December, the index fell below its pivot point to strong support near its 50-day moving average, lower trend line and S1 support at around 109.00. Traders should watch for a breakdown from this level to S2 support at 104.58 or a rebound higher towards its upper trend line and R1 resistance at 116.07. Looking at technical indicators, the RSI appears modestly oversold but the MACD remains in a strong downtrend.

Summary

The major U.S. indices moved lower this week near key support levels which traders will be watch for either a breakdown or rebound. Next week, traders will be watching for a number of key economic indicators including industrial production on December 16th, consumer price index data on December 17th, FOMC results on December 18th, jobless claims and existing home sales on December 19th, and GDP data on December 20th. Of course, the Federal Reserve comments will be the most closely watched of all events given its broad impact.

Charts courtesy of StockCharts.com.

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

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