The markets in the United States moved largely higher this week, amid mixed economic data and ongoing earnings reports from key sectors. While the Dow Jones Industrial Average and Russell 2000 Index jumped well over a point, the Nasdaq fell nearly a half point on the week thanks to Apple Inc.'s (Nasdaq:AAPL) earnings report that failed to impress analysts and investors.
International markets followed U.S. markets higher for the most part. In Europe, Germany's DAX jumped a little over a half point, while the United Kingdom's FTSE saw a rise of over 1.5%. In Asia, Japan's Nikkei fell about a point after experiencing a dramatic rise last week, and Hong Kong's Hang Seng fell about a quarter of point amid prospects of a protracted Chinese slowdown.
The S&P 500 SPDR Index (ARCA:SPY) ETF moved marginally higher this week, extending its breakout from the 146 level and the monthly R2 147.29 pivot point. Traders should watch for a possible retracement back to and a consolidation at the 146 or 147.29 levels before a substantial move higher, since the relative strength index (RSI) indicator seems to be showing excessive overbought conditions and the moving average convergence divergence (MACD) appears to be waning. Notably, a bearish crossover of the MACD could also indicate a more protracted downturn over the coming weeks.
SEE: A Primer On The MACD
The Dow Jones Industrial Average SPDR Index (ARCA:DIA) ETF mimicked the S&P 500 SPDR Index ETF for the most part, extending its rise above the 135 level and the monthly R2 135.44 pivot point. Traders should watch for a retracement and a consolidation of this index too, back to the 135 to 135.44 levels, given the sharply overbought RSI and waning MACD indicators. And again, a bearish crossover of the MACD could signal a protracted downturn over the coming weeks, but traders should watch for a false move, like the one earlier this year.
The PowerShares QQQ Index (Nasdaq:QQQ) ETF ended the week lower, thanks to Apple's earnings announcement that disappointed analysts and investors. Over the past couple weeks, the index has been trading between its R1 66.49 and R2 67.84 pivot points with very little in the way of a decisive price action. Traders should watch for a breakout of either of these levels to either retest the 70 upper trendline or 50-day moving average at 65.36. Unfortunately, the RSI and MACD indicators provide very few hints, although the MACD could be amidst a bearish crossover, signaling an additional potential downside.
SEE: The Anatomy Of Trading Breakouts
The Russell 2000 Index (ARCA:IWM) ETF has been among the top performing U.S. indexes over the past few weeks. After breaking through its 85.72 trendline and R2 87.12 pivot point, the index appears to be a little top heavy, judging by a sharply overbought RSI indicator and a MACD that appears both high and ready to reverse. Traders should watch for a retracement to the R2 87.12 pivot point level or perhaps even a move down to the 50-day moving average at 83.47 to close the gap up from the beginning of this year.
The Bottom Line
The major U.S. indexes primarily rose this week, with the exception of the PowerShares QQQ Trust ETF which fell thanks to Apple's earnings. Looking ahead towards next week, traders will be watching for GDP figures and FOMC minutes on Wednesday, Jan. 30, jobless claims and personal incomes on Thursday, Jan. 31, and employment data and the ISM Manufacturing Index data on Friday, Feb. 1, as well as ongoing corporate earnings throughout the 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.