The S&P 500 hit record highs last week despite rising political and economic risks. With a price-to-earnings multiple of 24.9x, the benchmark index is trading at a significant premium to its historical average of 15.7x, according to Multpl.com.

President Trump could face greater legal risk after his former campaign manager was found guilty on eight of 18 charges and his long-time attorney Michael Cohen pleaded guilty to two felony campaign finance violations. At the same time, the upcoming mid-term elections could introduce more uncertainty to the system. (See also: Dollar Dips, Global Stocks Inch up Ahead of Powell Speech.)

The United States also imposed 25% tariffs on an additional 279 Chinese products, including chemicals, semiconductors, plastics, motorcycles and railways cars. China responded to the $16 billion in tariffs with equal tariffs on diesel fuel, automobiles, coal and medical instruments.

Next week, traders will be closely watching several key economic events, including gross domestic product (GDP) data on Aug. 29 and consumer sentiment data on Aug. 31.

S&P 500 Hits New Highs in Channel

Technical chart showing the performance of the SPDR S&P 500 ETF (SPY)

The SPDR S&P 500 ETF (SPY) broke out from prior highs to R1 resistance at $287.39 last week. Traders should watch for a breakout from these levels to upper trendline resistance at $290.00 or a move lower toward the 50-day moving average at around $279.67. Looking at technical indicators, the relative strength index (RSI) is approaching overbought levels at 64.90, suggesting that there could be some near-term consolidation, and the moving average convergence divergence (MACD) remains at neutral levels, providing few hints about the future.

Industrials Struggle to Hold Support

Technical chart showing the performance of the SPDR Dow Jones Industrial Average ETF (DIA)

The SPDR Dow Jones Industrial Average ETF (DIA) briefly hit new highs before giving up some gains by the end of the week. Traders should watch for a rebound to test R1 resistance at $259.25, but a breakdown could lead to a move down to the 50-day moving average and pivot point at around $250.00. Looking at technical indicators, the RSI appears a bit lofty at 63.19, suggesting that there could be some consolidation, while the MACD has been trending sideways in recent weeks. (For more, see: Dow Transport Rally Points to Bull Run: Strategist.)

Tech Stocks Rebound in Rising Wedge

Technical chart showing the performance of the Invesco QQQ Trust (QQQ)

The Invesco QQQ Trust ETF (QQQ) moved higher from trendline support toward R1 resistance at $138.03 last week. Traders should watch for a breakout toward upper trendline resistance at $185.00 or a move lower to retest trend line support at around $180.00. Looking at technical indicators, the RSI appears rather neutral at 61.33, but the MACD could see a bullish crossover after its downtrend, suggesting that the index could continue its upward momentum ahead.

Small Caps Break Out from Ascending Triangle

Technical chart showing the performance of the iShares Russell 2000 ETF (IWM)

The iShares Russell 2000 ETF (IWM) broke out from an ascending triangle to fresh all-time highs last week. Traders should watch for an extended move toward R2 resistance at $173.85 or a move lower to retest trendline and R1 support at around $169.86. The RSI is trending toward overbought levels at 63.73, suggesting a potential consolidation ahead, but the MACD continued its bullish uptrend, suggesting that the long-term trend remains bullish. (For additional reading, check out: 4 Under-the-Radar Small-Cap Stars.)

Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.