The major U.S. indexes moved slightly lower in a relatively quiet week of trading. Retail sales growth fell short of economist expectations, but preliminary consumer confidence in May rose more than expected to a robust 97.7. The primary driver behind the decline in equity markets was lackluster earnings among some larger companies. According to FactSet, more than three-quarters of companies beat earnings expectations, but earnings guidance has remained relatively soft, and price-earnings multiples remain lofty.
International markets were mixed over the past week. Japan’s Nikkei 225 rose 2.25%; Germany’s DAX 30 rose 0.42%; and, Britain’s FTSE 100 rose 1.8%. In Europe, the Eurozone economy posted faster growth rates than the U.S. economy during the first quarter at a 0.5% quarterly rate and 1.8% annualized rate for 2017. In Asia, Japan is expected to post its fifth straight quarter of growth as consumer spending and offshore growth continue to improve, according to a Reuters poll of economists.
The S&P 500 SPDR (ARCA: SPY) fell 0.31% over the past week, as of late Friday afternoon. After briefly reaching new highs, the index moved marginally lower toward its pivot point. Traders should watch for a move lower to the pivot point and 50-day moving average at $236.39 or a rebound to retest trend line resistance at around $240.00. Looking at technical indicators, the RSI has moderated to 58.60, while the MACD could see a bearish crossover over the near-term, which could translate to a move lower next week.
The Dow Jones Industrial Average SPDR (ARCA: DIA) fell 0.37% over the past week, as of late Friday afternoon. After briefly moving towards its highs, the index moved lower toward its pivot point. Traders should watch for a breakdown to its pivot point and 50-day moving average at $207.49 or a rebound higher to retest its trend line resistance at around $210.50. Looking at technical indicators, the RSI appears relatively neutral at 56.12 while the MACD appears ready to experience a bearish crossover that could point to downside ahead.
The PowerShares QQQ Trust (NASDAQ: QQQ) rose 0.73% over the past week, as of late Friday afternoon. Since reaching its R1 resistance at $138.09, the index has trended sideways for the past week. Traders should watch for a breakout to R2 resistance at $140.20 or a move lower to test its lower trend line support at around $136.00. Looking at technical indicators, the RSI appears overbought at 79.26, but the MACD remains in a long-term bullish uptrend dating back to late-April of this year.
The iShares Russell 2000 Index ETF (ARCA: IWM) fell 1.07% over the past week, as of late Friday afternoon. After breaking below its pivot point at $138.18, the index moved toward its 50-day moving average at $136.86. Traders should watch for a rebound back toward its upper trend line and R1 resistance at $142.70 or a break down towards S1 support at $134.54. Looking at technical indicators, the RSI appears neutral at 47.40, but the MACD may have experienced a bearish crossover signaling more downside ahead.
The Bottom Line
The major U.S. indexes moved lower over the past week, as of late Friday afternoon. Next week, traders will be closely watching several economic indicators, including housing starts on May 16 and jobless claims on May 18. The market will also be closely watching for any changes on the geopolitical stage with ongoing tensions with Russia and China.
Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.