The markets in the United States ended the week on a mixed note after a flurry of mergers and acquisitions (M&A) helped offset weakness spurred by a lower than expected fourth quarter GDP reading, with the Russell 2000 jumping 1.11% and the Dow Jones Industrial Average falling 0.26%. Over the past week, economic indicators saw consumer confidence jumping more than what was expected to 76.3, but business inventories coming in less than expected, signaling a potential disconnect.
Foreign markets were also largely mixed this week. Britain's FTSE 100 jumped more than 1%, Japan's Nikkei 225 fell 0.16% and China's Xinhua China 25 jumped about 1%. Traders in these markets remain focused on the future monetary policy action in Japan, the central bank policy changes in the Bank of England and the potential improvements in China's market following an economic pick-up after reaching a 13-year low in recent quarters.
The SPDR S&P 500 (ARCA:SPY) ETF jumped 0.28% this week amid some economic news that somewhat bullish and a flurry of M&A activity. Currently, the index trades roughly at its R1 pivot point resistance at 152.18, with upper resistance at the R2 pivot point of 154.67 and lower support at the pivot point of 148.46. Technical indicators suggest that the index may still be overdue for a retracement, with a relative strength index (RSI) reading of 69.01 and a moving average convergence divergence (MACD) that appears ready for a bearish crossover, although both of these signals have signaled the same over the past weeks.
SEE: Momentum And The Relative Strength Index
The PowerShares QQQ (Nasdaq:QQQ) ETF moved down 0.13% this week, as technology companies still struggle to find a balance amid Apple's extended slump. Currently, the index trades between its R1 pivot point support level at 67.72 and its R2 pivot point resistance level at 68.56, in choppy and indecisive trading action that could continue moving into next week. Technical indicators suggest that the index is marginally overbought, with an RSI reading of 57.97, while the MACD remains even and uneventful for the time being.
The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF lagged the other major indexes this week, falling around 0.26% in mid-day trading on Friday. Currently, the index trades between its pivot point support level at 137.08 and R1 pivot point resistance level at 141.55. Technical indicators pointed to an overbought climate, with the RSI reading a high 63.17 and the MACD already in a bearish crossover that suggests a potential downside or at least an even price action ahead for traders in the market's most watched index.
SEE: Trading The MACD Divergence
The iShares Russell 2000 Index (ARCA:IWM) ETF continued to outperform the other major indexes this week, jumping more than 1% as of mid-day trading on Friday. Recently, the index broke out from its R1 pivot point resistance at 91.19 and trades just below its R2 pivot point resistance at 92.81. The consistent rise in the index has led to overbought conditions, with the RSI technical indicator reading a high 71.63, but the MACD appears on the verge of a bullish crossover that could suggest higher prices moving into next week.
The Bottom Line
The major indexes in the U.S. were mixed this week, led by the Russell 2000 and lagged by the Dow Jones Industrial Average. Many of these indexes appear to be overbought at current levels, suggesting a potential retracement in the near term, although they have thus far been bucking the trend towards the upside. Looking ahead to next week, traders should watch for FOMC minutes due out on Feb. 20 and jobless claims due out Feb. 21 for hints on both monetary policy decisions moving forward and potential improvements in the U.S. job market.
Charts courtesy of stockcharts.com.
At the time of writing, Justin Kuepper did not own any shares in any company mentioned in this article.