Market Summary For November 23, 2012

By Justin Kuepper | November 22, 2012 AAA

The markets in the United States moved higher this week amid optimism that the "fiscal cliff" concerns would be resolved and some favorable economic indicators. The housing market showed signs of improving and jobless claims came in lower than expected, but consumer sentiment came in lower than the economists' estimates of 84 at 82.7 and U.S. leading indicators remain somewhat depressed at 0.2% compared to 0.6% during the previous period.

International markets also showed signs of improvement this week, after Japan's Nikkei hit a two-month high and Greece's creditors agreed to reconvene Monday in order to try and reach an agreement to release the next round of bailout funds. Germany also reported that its business confidence rose unexpectedly in November, providing a positive spin on the eurozone's most important economy driving growth.

The S&P 500's SPDR (ARCA:SPY) ETF moved sharply higher this week in a sharp reversal of its breakdown last week. The index rebounded off of a prior high at around $135 and broke out past the key 200-day moving average at $137.57, but all of this occurred on relatively low volume given the U.S. Thanksgiving holiday on Thursday and the early market close Friday. Currently, the index trades between the 200-day moving average and the 50-day moving average at $142.70, with a neutral relative strength index (RSI) reading and a bullish moving average convergence divergence (MACD) crossover. Looking ahead, traders should watch for a false breakout given the low volume and keep an eye on the 50-day moving average at $142.70 as the next major area of resistance and potential breakout.

SEE: Trading The MACD Divergence

SPY rebounded off of a prior high

The Dow Jones Industrial Average SPDR (ARCA:DIA) ETF moved sharply higher this week, reversing last week's downward trend. The index rebounded from just above prior lows at around $124 and barely gapped up through the 200-day moving average at $128.36 on very little volume. Currently, the index trades above the 200-day moving average and below the 50-day moving average at around $131.87, with a neutral RSI and a MACD that just showed a bullish crossover. Looking ahead, traders should keep an eye on the 50-day moving average as the next area of key resistance, as the 200-day moving average and prior highs provide support.

SEE: Support & Resistance Basics

DIA rebounded from just above prior lows

The PowerShares QQQ (Nasdaq:QQQ) ETF moved sharply higher this week, reversing the downward trends seen last week. The index rebounded from strong support at prior lows of around $62 on relatively low volume given the holiday, but remains below its 200-day moving average at $65.22 and prior highs at around the same level, with a neutral RSI indicator and a bullish crossover in the MACD indicator. Looking forward, traders should keep an eye on the $65 - $65.22 resistance level as a potential area of reversal or potentially a breakout.

QQQ rebounded from strong support

The iShares Russell 2000 Index (ARCA:IWM) ETF followed the other major indexes by moving sharply higher this week, reversing last week's downwards trend. The index rebounded from prior lows at around $76.50 to briefly surpass the 200-day moving average at around $80.03 on low volume due to the U.S. holiday. Currently, the index trades between the two moving averages with a neutral RSI indicator and the beginnings of a bullish breakout from the MACD indicator. Looking ahead, traders should watch for potential resistance or a breakout of the $81.90 level and the 50-day moving average of $82.25.

SEE: An Introduction To The Relative Strength Index

IWM reversed last weeks trends

The Bottom Line
The major U.S. indexes moved largely higher this week, but the low volume suggests that the moves could be reversed next week, particularly as many remain at key resistance levels. Looking ahead, traders will be keeping an eye on several key economic indicators due out next week, including new home sales data and the Beige Book on November 28, GDP and jobless claims on November 29 and personal income and outlays on November 30.

Charts courtesy of stockcharts.com.

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

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