The markets in the United States moved marginally higher this week, with the Nasdaq leading the group and the Russell 2000 index seeing the least gains. Better than expected earnings helped send the major indexes near their five-year highs early during the week, but the lackluster report from Wells Fargo has cast a shadow on the banking sector, as the first bank to report earnings. Looking ahead, investors are also growing increasingly nervous about the flu season's impact on economic output.

SEE: An Explanation Of Stagflation

Global markets were largely mixed during the week, too. The Nikkei 225 surged over 1% following Shinzo Abe's new stimulus package, while the FTSE 100 rose 0.5% and the DAX fell just under 1% during the week. Traders will be closely watching Japan's economy given the $116 billion stimulus program that was just signed into law, which could boost domestic stocks and help its economy recover from years of stagflation and recent bouts of deflation.

The S&P 500 SPDR (ARCA:SPY) ETF rebounded from its 50-day moving average at 141.26 and broke through prior highs at around 146 before consolidating at the end of the week. Since the breakout of the 146 level occurred on low volume, traders should watch this level for a retest before a move higher, while the downside could potentially lead to the 50-day moving average or the lower trendline at about the same level. Technical indicators also remain mixed with the relative strength index (RSI) showing modestly overbought conditions at 64.49 and the MACD remaining in a bullish uptrend after a crossover that occurred earlier this month.

The SPY ETF rebounded from its 50-day moving average.



SEE: Exploring Oscillators and Indicators

The Dow Jones Industrial Average SPDR (ARCA:DIA) ETF rebounded from its 200-day moving average at 128.71 and broke through its 50-day moving average at 130.29 before resting just below prior highs at around 135.30. Traders should watch for this upper trendline to be tested, resulting in either a high volume breakout or a retracement back to the 50-day moving average at 130.29 before any potential move higher. As with the SPY index, the technical indicators remain mixed with the RSI showing marginally overbought conditions with a reading of 62.62 and the MACD remaining in a bullish uptrend after its bullish crossover back in late-November.

The DIA ETF rebounded from its 200-day moving average.

The PowerShares QQQ (Nasdaq:QQQ) ETF broke through its 50-day and 200-day moving averages before rebounding sharply this week near the 61.8% Fibonacci retracement level. Traders should watch for a move beyond these levels to prior highs at around 70.10 or a move down towards a lower trendline around 64. Traders should closely watch earnings from technology bellwethers like Apple Inc.'s January 23 announcement to determine future price swings in either direction. As with the other indexes, technical indicators remained mixed with a bullish MACD reading and a slightly overbought RSI at 61.48.

The QQQ ETF broke through its 50-day and 200-day moving averages before rebounding sharply.

SEE: Spotting Trend Reversals With MACD

The iShares Russell 2000 Index (ARCA:IWM) ETF extended its rally this week above both its 50-day and 200-day moving averages, breaking above prior highs of around 85.40 before taking a break. Traders should watch for this key level to be retested, with a breakdown potentially leading to the 50-day moving average at 81.96. As with the other major indexes, the technical indicators remained mixed with the RSI trading at 69.74 and the MACD remaining in a bullish pattern following its bullish crossover back in late-November.

The IWM ETF extended its rally this week above both its 50-day and 200-day moving averages.

The Bottom Line
The major U.S. indexes moved largely higher this week, driven by a strong projected earnings season. Despite this optimism, traders will be closely watching the impact of this flu season, as well as potentially lackluster bank earnings next week. In addition, traders will be watching a number of key economic indicators, including retail sales data due out on January 15, industrial production due out on January 16 and housing and jobs numbers due out on January 17.

Charts courtesy of stockcharts.com

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

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  3. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
  5. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Turkey

    Learn about the iShares MSCI Turkey exchange-traded fund, which invests in a wide variety of companies' equities traded on Turkish exchanges.
  7. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  8. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  4. Indicator

    Indicators are statistics used to measure current conditions ...
  5. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  6. Lion economies

    A nickname given to Africa's growing economies.
RELATED FAQS
  1. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  2. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  3. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  4. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  5. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  6. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!