The major U.S. indexes moved largely higher over the past week, with the exception of technology stocks in the PowerShares QQQ Trust. Third quarter gross domestic product (GDP) game in at a solid 3.2% annualized rate in its final reading, but nonresidential fixed investment accounted for a much larger slice of the pie than consumer spending. Consumer sentiment also fell to 95.9 in December, although the current conditions component hit 113.8 this month.
International markets were mixed over the past week. Japan's Nikkei 225 rose 1.53%; Germany's DAX 30 fell 0.23%; and Britain's FTSE 100 rose 1.3%. In Europe, the euro experienced a modest shock after Catalan separatists won a regional election that could hurt the region's fourth largest economy. In Asia, the Japanese government increased its output and capex estimates as the economy continued to post a strong recovery.
The SPDR S&P 500 ETF (ARCA: SPY) rose 0.38% over the past week. After breaking out from R1 resistance at $267.46, the index moved lower to retest trendline support levels by the end of the week. Traders should watch for a breakdown to the pivot point at $160.90 or a rebound to retest upper trendline resistance at around $270.00. Looking at technical indicators, the relative strength index (RSI) remains in overbought territory at 70.95, while the moving average convergence divergence (MACD) could see a bearish crossover in the near term after experiencing a rise dating back to late November. (See also: Hedge Funds See Opportunity in the S&P 500.)
The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) rose 0.47% over the past week. After breaking out from R1 resistance at $246.29, the index retraced to trendline support at around $247.50 by the end of the week. Traders should watch for a breakdown to the pivot point at $238.93 or a rebound higher to retest upper trendline and R2 resistance at $250.30. Looking at technical indicators, the RSI appears overbought at 75.56, while the MACD could see a bearish crossover in the near term following its rise over the past month.
The PowerShares QQQ Trust (NASDAQ: QQQ) fell 0.18% over the past week, making it the worst performing major index. After reaching upper trendline resistance, the index fell to R1 support levels at around $157.31. Traders should watch for a rebound to retest upper trendline and R2 resistance at $159.79 or a breakdown to lower trendline support near the pivot point at $153.88. Looking at technical indicators, the RSI appears slightly overbought, but the MACD remains in a somewhat bullish uptrend. (For more, see: JPMorgan Bullish on Large-Cap, Mid-Cap Tech Stocks.)
The iShares Russell 2000 Index ETF (ARCA: IWM) rose 0.62% over the past week, making it the best performing major index. After rebounding from the pivot point at $150.33, the index traded sideways at just under $154.00 for most of the week. Traders should watch for a breakout to upper trendline and R1 resistance at $156.71 or a breakdown to pivot point support at around $150.33. Looking at technical indicators, the RSI appears relatively neutral at 60.16, while the MACD continues to trend sideways.
The Bottom Line
The major indexes moved higher over the past week, but many have increasingly bearish technical factors working against them. Next week, traders will be closely watching several different economic events, including consumer confidence on Dec. 27, jobless claims on Dec. 28 and the Chicago PMI on Dec. 29. The week should see relatively light trading, however, given the Christmas holiday. (For additional reading, check out: How to Give a Stock for Christmas.)
Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.