The markets in the United States moved lower this week after jobless claims and pending home sales came in below economists' forecasts. Jobless claims came in at 369,000 compared to 372,000 that was forecasted, while pending home sales rose only 0.3% compared to the forecasted 2.5%. But, the real driver behind the decline was poor corporate earnings, including misses by major companies like Apple (Nasdaq:AAPL), General Electric (NYSE:GE) and Amazon (Nasdaq:AMZN).

Global markets have also struggled over the past week, with unemployment in the eurozone rising to "deplorably high" levels, according to ECB President Mario Draghi. Recently, the ECB lowered its projection for economic growth in the eurozone for 2012 and 2013, while also raising its forecast for inflation in the region. The bank expects the eurozone to drop 0.4% this year and grow 0.5% next year, while inflation could rise 2.5% in 2012 and 1.9% in 2013.

The S&P 500's SPDR (ARCA:SPY) ETF moved lower this week after breaking down from the 50-day moving average at $143.33. The index is now consolidating at a prior high from mid-August, but could move lower to the 200-day moving average at $136.77 before a more robust rebound takes hold. The moving average convergence divergence (MACD) indicator remains in a free fall with little sign of a crossover in the near-term, while the relative strength index (RSI) remains at 37.37, suggesting that the index may be somewhat oversold.

SEE: A Primer On The MACD

SPY's ETF moved lower this week after breaking down from the 50-day moving average.

The Dow Jones Industrial Average SPDR (ARCA:DIA) ETF also moved lower this week after breaking down from its 50-day moving average at $132.99. The index is now consolidating at a key 61.8% retracement level at $129.7, but could move lower to the 200-day moving average at $128.31 before a durable recovery is seen. Like the SPY index, the MACD indicator remains in a free fall with a widening gap while the RSI remains oversold at around 33.81, suggesting that the stock could rebound slightly before any move lower.

SEE: Momentum And The Relative Strength Index

The DIA ETF also moved lower this week after breaking down from its 50-day moving average.

The PowerShares QQQ (Nasdaq:QQQ) ETF followed the other major indexes with a move lower, breaking down from its 50-day moving average at $68.11. After briefly retesting the 50-day moving average, the index has fallen down to its 200-day moving average at $64.88 where it's likely to experience a bit of support. While the index's MACD remains in a free fall with a widening gap, the RSI remains oversold at 30.74, suggesting that the index could consolidate before any further downside.

SEE: Trading The MACD Divergence

The QQQ ETF followed the other major indexes with a move lower.

The iShares Russell 2000 Index (ARCA:IWM) ETF has also moved largely lower over the past week, breaking down from its 50-day moving average at $82.87. Currently, the index is trading in a tight range between the 50-day and 200-day moving average at $79.92, which should provide a strong base of support. Meanwhile, the MACD remains in a relative free fall suggesting further downside, and the RSI is reading at around 36.12 suggesting that the index may be poised for a break from the downside with some sideways movement.

The IWM ETF has also moved largely lower.

The Bottom Line
The major U.S. indexes moved lower this week after poor corporate earnings and economic readings took their toll. On a technical basis, the S&P 500 and Dow Jones Industrial Average are poised to see further downside, while the PowerShares QQQ and Russell 2000 Index remain at or near key support levels that could mean some sideways trading or a rebound.

Next week, traders will look towards a number of key economic indicators and additional earnings announcements. In particular, U.S. personal income and outlays will come out on October 29, U.S. jobless claims will come out on November 1, the ISM Manufacturing Index is due out on the same day and U.S. employment data is scheduled for November 2.

At the time of writing, Justin Kuepper did not own any shares in any company mentioned in this article.

Related Articles
  1. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  2. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  3. Chart Advisor

    These 3 ETFs Suggest Commodities Are Headed Lower (COMT,CCX,DBC)

    The charts of these three exchange traded funds suggest that commodities are stuck in a downtrend and it doesn't look like it will reverse any time soon.
  4. Trading Strategies

    4 ETFs To Trade the Russian Ruble (RSX, ERUS)

    Discover which exchange-traded funds (ETFs) provide investors with the greatest exposure to the Russian ruble and learn about the risks that come with each.
  5. Chart Advisor

    3 Charts That Suggest Now Is The Time To Invest In Real Estate (VNQ, SPG,PSA)

    Real estate assets have some of the strongest uptrends around. We'll take a look at three candidates poised for a move higher.
  6. Chart Advisor

    Stocks With More Upside Due to Bear Traps (TAP, SPY)

    A bear trap is a pattern that typically leads to at least a short-term rise in prices. Here are stocks exhibiting the pattern.
  7. Products and Investments

    Are Dividend Stocks a Good Substitute for Bonds?

    Are dividend paying stocks a good substitute for bonds in a low interest rate environment?
  8. Mutual Funds & ETFs

    When Is the Right Time to Change From Mutual Funds to ETFs

    Find out how to determine when it's the right time for you to switch from mutual funds to ETFs, including the benefits of ETFs and who they are best for.
  9. Investing Basics

    An Introduction To Structured Products

    Structured products take a traditional security and replace its usual payment features with a non-traditional payoff.
  10. Investing Basics

    Understanding Alternative Investments

    An alternative investment is one that’s not among the three traditional asset types – stocks, bonds or cash.
  1. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  2. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  3. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  4. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  5. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  6. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
Trading Center