The markets in the United States moved largely higher this week, with the exception of the Nasdaq, following relatively upbeat earnings. Bank earnings were among the most watched this past week, with commercial bank earnings projected to grow 39% in aggregate this quarter. Gun sellers also experienced a jump after President Obama outlined plans to enhance gun control laws. But ultimately, concerns over the debt ceiling and the U.S. credit rating kept stocks subdued.
International markets fared significantly better this week, despite new data showing that Germany's economy contracted in the fourth quarter and Britain's economy entered a triple-dip recession. Top gainers included the Nikkei 225, which soared due to the introduction of new stimulus and the promise of a lower yen, and the Shanghai Composite, which both rose more than 14% on the week due to favorable macroeconomic trends.
The S&P 500 SPDR (ARCA:SPY) ETF rose by about a third of a point this week, as the nervousness of investors balanced favorable bank earnings. After breaking through prior highs last week, the index continued its move higher past the key R2 pivot point level. Traders should watch for a move higher to the next resistance at around 148.61 or a move down to support at around 146.39 at the prior high turned support level. Looking at technical indicators, the relative strength index (RSI) remains at a relatively high 65.30, suggesting overbought conditions, while the moving average convergence divergence (MACD) remains in a bullish trend, but has weakened considerable this week.
SEE: A Primer On The MACD
The Dow Jones Industrial Average SPDR (ARCA:DIA) ETF followed the same path as the SPY index, with relative indecision on the part of investors. After breaking through its own prior high last week, the index was trading roughly around its R2 pivot point resistance level at around 135.59 for the week. Traders should watch for a potential breakout higher to its next resistance at 136.35 or a break down to support levels at around 134.40. When it comes to technical indicators, the RSI shows overbought conditions with a 64.50 reading, while the MACD remains in a bullish uptrend dating back to mid-November last year.
SEE: Support & Resistance Basics
The PowerShares QQQ (Nasdaq:QQQ) ETF was the only major U.S. index that moved lower on the week, as of mid-session Friday afternoon. The index remained largely mired between its R1 and R2 pivot point resistance levels, after breaking out earlier this year. Traders should watch for a move up to its R2 pivot point resistance at 67.84 for the month or possibly a breakdown from its lower R1 point at 66.49 to around 65.04 at the 50-day moving average. Looking at technical indicators, the RSI appears moderate at 56.20, but the MACD appears close to a bearish crossover that could signal further downside.
The iShares Russell 2000 Index (ARCA:IWM) ETF continues to outperform all of the other major U.S. indexes, as it has over the past 52-weeks. The index continued its rise this past week, jumping above its R2 pivot point resistance level at 87.12 in a near parabolic rise since mid-November. Traders should watch for a breakout of its next weekly R1 pivot point resistance level at around 88.84 or a breakdown below its S1 support level at 87.38. From a technical indicator point of view, the index looks sharply overbought with a 72.68 reading on the RSI and is nearing a bearish crossover on its MACD readings.
SEE: The Anatomy Of Trading Breakouts
The Bottom Line
The major U.S. indexes were largely mixed this week amid bullish bank earnings and bearish concerns about the debt ceiling. Next week, traders will be in for much of the same in addition to existing home sales data out on Tuesday, jobless claims due out Thursday and new homes sales data due out on Friday of next week.
Charts courtesy of stockcharts.com.
At the time of writing, Justin Kuepper did not own any shares in any company mentioned in this article.