Major U.S. indices moved higher this week, as higher new home sales, lower jobless claims and positive signs of consumer spending offset slower growth in personal incomes and lower than expected consumer sentiment. Large-cap stocks in the Dow Jones Industrial Average led U.S. equities higher, while small-cap stocks in the Russell 2000 lagged the market. Looking forward, investors will be closely watching the Federal Reserve for signs of policy changes.

International markets moved higher this week due to strength in the U.S. and other developed markets. Japan’s Nikkei 225 jumped 1.94%; Britain’s FTSE 100 jumped 2.18%; and, Germany’s DAX 30 jumped 2.01% this week. In the eurozone, economic activity picked up in December although the ECB warned that growth remains fragile. In Asia, Japan’s economy continues to be the big story as Prime Minister Shinzo Abe’s reforms continue to plow forward.

The SPDR S&P 500 (ARCA:SPY) ETF jumped 1.20% this week as of midday trading Friday afternoon. After surpassing its R1 resistance at 182.73, the index moved towards its upper trend line that lies just below its R2 resistance at 185.30. Traders should watch for a breakout above this level to new highs or a move back down to the lower trend line and pivot point at 178.34. Looking at technical indicators, the RSI appears overbought at 69.01 but the MACD experienced a bullish crossover, sending mixed signals to traders moving forward.

The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF jumped 1.38% this week as of midday trading Friday afternoon. After rebounding from its pivot point at 158.57, the index moved past its upper trend line and R1 resistance at 162.94 and trades below its R2 resistance at 165.56. Traders should watch for a breakout from these levels or a move back down to its pivot point to S1 support at 155.96. Looking at technical indicators, the RSI appears overbought at 73.03 but the MACD experienced a bullish crossover signaling potential increases ahead.

The PowerShares QQQ (NASDAQ:QQQ) ETF jumped 1.24% this week as of midday trading Friday afternoon. After rebounding from its pivot point at 84.05, the index moved past its R1 resistance at 86.98 and towards its upper trend line and R2 resistance at 88.50. Traders should watch for a breakout from these levels to new highs or a move back down to its pivot point or S1 support at 82.52. Looking at technical indicators, the RSI appears overbought at 70.86 but the MACD experienced a bullish crossover, sending mixed signals to traders.

The iShares Russell 2000 (NYSE:IWM) ETF jumped 0.89% this week as of midday trading Friday afternoon. After rebounding from its lower trend line and pivot point at 111.18, the index moved up to its R1 resistance and upper trend line at 115.62 before moving marginally lower. Traders should watch for a breakout from these levels to new highs or a move back down to its lower trend line and pivot point. Looking at technical indicators, the RSI appears overbought at 65.87 but the MACD experienced a bullish crossover that sent mixed signals to traders.

Summary

The major U.S. indices moved largely higher this week either meeting or exceeding upper resistance levels. While all of the major indices appear overbought in terms of their RSI’s, the MACD indicators seem to suggest a durable uptrend emerging. Next week, traders will be watching a number of economic indicators including jobless claims and ISM manufacturing data that’s set to be released on January 2nd after the new year.

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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