The major U.S. indexes ended in positive territory after a volatile week of trading characterized by ongoing political risk and uncertainty. While industrial production was disappointing early in the week, existing home sales surged 4.4% to their best rate since February 2007 with median prices rising 3.6% to $236,400. These factors played into the market’s movements, but investors remain most concerned about the developing crisis in North Korea and President Trump's struggle to implement promised reforms.
International markets were mixed over the past week. Japan’s Nikkei 225 rose 1.57%; Germany’s DAX 30 rose 0.40%; and, Britain’s FTSE 100 fell 0.50%. In Europe, the regional economy appears to be gaining momentum after IHS Markit’s Flash PMI climbed to 56.7 – its highest levels since April 2011. In Asia, investors remain concerned over trouble brewing in North Korea where China and Russia are gearing up for problems. Political risks are likely to continue to weigh on the market in the absence of a definitive foreign policy.
The S&P 500 SPDR (ARCA: SPY) rose 0.89% over the past week. After rebounding to its pivot point at $235.54, the index remains in the middle of a narrowing price channel. Traders should watch for a breakout from its upper trend line resistance to R1 resistance at $239.48 or a breakdown from its lower trend line resistance to S2 support at $227.87. Looking at technical indicators, the RSI remains neutral at 50.57, while the MACD could be nearing the end of a bearish downtrend with a possible near-term bullish crossover.
The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 0.43% over the past week, making it the worst-performing index. Despite rebounding from its lower trend line resistance, the index remains in a bearish descending triangle chart pattern. Traders should watch for a breakdown from lower trend line support to S2 support at $199.56 or a breakout from its upper trend line resistance and 50-day moving average to R1 resistance at $201.22. Looking at technical indicators, the RSI is neutral at 47.29 while the MACD remains in a bearish trend.
The PowerShares QQQ Trust (NASDAQ: QQQ) rose 1.64% over the past week. After breaking out from its pivot point, the index is on its way to R1 resistance at $133.61. Traders should watch for a breakout to its upper trend line resistance and R2 resistance at $134.85 or a move lower to re-test its pivot point at $131.51. Looking at technical indicators, the RSI appears a little lofty at 61.20, while the MACD appears poised for a bullish crossover in the near-term.
The iShares Russell 2000 Index ETF (ARCA: IWM) rose 2.6% over the past week, making it the best performing index. After breaking out from its pivot point at $136.78, the index has been holding steady just above those levels. Traders should watch for an ongoing move higher toward R1 resistance at $141.16 or a breakdown lower to S1 support at around $133.10. Looking at technical indicators, the RSI appears neutral at 55.42, while the MACD has trended sideways – although a bullish crossover is a possibility.
The Bottom Line
The major U.S. indexes moved higher over the past week. With high volatility and neutral technical indicators, there’s little insight for investors into next week’s trading. Traders should keep a close eye on several upcoming events, including new home sales on April 25, jobless claims on April 27, and GDP data and consumer sentiment on April 28. Of course, the market will also be keeping a close eye on political risks that remain a key concern.
Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.