Tickers in this Article: QQQQ, DIA, SPY, IWM, ISRG, AAPL, INTC, AMZN, MSFT
The markets continued building on the impressive rally they staged last week. There were many mixed earnings developments this week, with some stocks like Intuitive Surgical (Nasdaq:ISRG) and Apple (Nasdaq:AAPL) beating expectations, while other like Amazon.com (Nasdaq:AMZN) and Microsoft Corporation (Nasdaq:MSFT) offered disappointing numbers.

Despite the mixed earnings reports, all the major indexes were able to clear their recent highs established in June. This move above resistance suggests that the markets are beginning a new leg up. While this is certainly a bullish development, it makes sense to step back and see how far we have come and where the markets may run into roadblocks moving forward.

Weekly Roundup
This week, rather than looking at daily charts, we will be scaling back and viewing weekly charts. Typically, the shorter the time frame a trader uses, the noisier and more riddled with false moves a chart becomes. Weekly charts can offer a fresh perspective for a trader solely focused on the daily gyrations of the markets.

While the near-term focus has been on the failed head-and-shoulders top on the daily chart, the chart for the Diamonds Trust, Series 1 (NYSE:DIA) ETF, which tracks the Dow Jones Industrial Average, is showing a larger reverse head-and-shoulder bottom pattern, which was recently broken to the upside. While this looks great, let's not forget that in the grand scheme of things, this has only served as a partial retracement of the bear market that began in late 2007. Moving forward, the $90 area should provide support, with strong resistance looming near $105-$110.

Source: StockCharts.com

The chart for the S&P 500 SPDRS (NYSE:SPY) ETF is very similar to the DIA chart. I highlighted a Fibonacci retrace line on the chart to show that the entire rally from the March lows has only managed to gain back one-third of the bear market decline. While the recent price action is certainly bullish, it is important to note that the markets remain well off their prior bull market highs. There is still plenty of room for the markets to go higher, but having the proper perspective is invaluable as a trader. The next levels to watch are the 50% retrace at $109 and the 61.8% retrace at $119, which also coincides with prior support and the 200-week moving average. The $95 area should provide support moving forward if this breakout is valid. (Discover how this amazing ratio, revealed in countless proportions throughout nature, applies to the financial markets in Fibonacci And The Golden Ratio.)

Source: StockCharts.com

The iShares Russell 2000 Index (NYSE:IWM) ETF also extended last week's breakout, clearing the June high in the process. Much like its peers, it finds itself above support, with some room before reaching strong resistance levels. The $52-$54 area should provide support moving forward, with the strongest resistance levels near $65.

Source: StockCharts.com

The Powershares QQQ ETF (Nasdaq:QQQQ) continues to be the strongest of the market ETFs. QQQQ has been off to the races since clearing the W bottom in April. It continued to extend its gains last week, and is getting close to a test of major resistance near $41. This should prove a stiff challenge and may put a halt to the current rally. Traders should watch the action in leading tech stocks such as Intel Corporation (Nasdaq:INTC) and Apple to get a feel for what the rest of the index will do. (Discover how these influential levels can switch roles in Support And Resistance Reversals.)

Source: StockCharts.com

Putting Things in Perspective
The key theme this week is that it's always important to put things into perspective. While the markets have cleared important resistance and may have room to continue the rally, reviewing the weekly chart offers a different perspective. Stepping back, it's quite apparent that the markets are still in a downtrend, and there are other levels of resistance that need to be watched. By having the proper perspective, a trader can better manage risk and plan ahead for whatever the markets do next.

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At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

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