The major U.S. indexes ended the shortened holiday week on a mixed note and logged their first quarterly losses in nearly three years. While stocks moved broadly higher in January following tax cuts, they fell in February due to concerns about higher inflation and again in March amid fears of a trade war with China. Facebook, Inc. (FB) and other tech stocks have also been weighed down by allegations of privacy violations following the Cambridge Analytica scandal.
International markets were higher over the past week. Japan's Nikkei 225 rose 5.04%, Germany's DAX 30 rose 1.49%; and Britain's FTSE 100 rose 1.87%. In Europe, JPMorgan analysts suggested that the euro could be about to turn lower given deterioration in the region's economic data following months of outperformance. In Asia, Japanese factory output rose 4.1% in February as labor demand has strengthened considerably.
The SPDR S&P 500 ETF (ARCA: SPY) rose 0.39% over the past week. After rebounding from its prior lows, the underlying S&P 500 index rebounded to end the week on a higher note. Traders should watch for a rebound to the pivot point at $268.14 or a breakdown from the 200-day moving average and S1 support at $254.34 to S2 support at $238.12. Looking at technical indicators, the relative strength index (RSI) appears slightly oversold at 42.71, but the moving average convergence divergence (MACD) remains in a bearish downtrend that could signal more downside ahead. (See also: 3 Charts to Watch as Volatility Rises.)
The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) rose 0.99% over the past week, making it the best performing major index. After briefly hitting S1 support at $234.40, the index rebounded higher by the end of the week. Traders should watch for a breakout to the pivot point at $248.08 or a breakdown from S1 support and the 200-day moving average to S2 support at $219.06. Looking at technical indicators, the RSI appears neutral at 44.19, but the MACD remains in a prolonged bearish downtrend.
The Invesco QQQ Trust (NASDAQ: QQQ) fell 0.98% over the past week, making it the underlying Nasdaq 100 index worst performing major gauge. After breaking below the pivot point, the index made new lows at around $157.50 last week. Traders will be watching for a breakdown from these levels to S1 support at $154.40 or the 200-day moving average at $152.13 or a rebound to retest the pivot point at around $162.43. Looking at technical indicators, the RSI appears slightly oversold at 42.16, but the MACD remains in a bearish downtrend. (For more, see: JPM Warns Customers Against Tech Stocks.)
The iShares Russell 2000 Index ETF (ARCA: IWM) fell 0.17% over the past week. After falling to the pivot point at $149.67, the index rebounded slightly on Thursday but still ended the week lower. Traders should watch for a breakout from the 50-day moving average at $153.88 to R1 resistance at $157.18 or a breakdown from the pivot point to the 200-day moving average at $147.02. Looking at technical indicators, the RSI appears neutral at 45.32, but the MACD remains in a bearish downtrend.
The Bottom Line
The major indexes were mixed over the past week. While RSI readings were neutral to slightly oversold, bearish MACD readings suggest that the indexes could see more downside ahead. Next week, traders will be closely watching several key economic indicators, including the ADP Employment Report on April 4 and the Bureau of Labor Statistics' Employment Report on April 6, which could set the stage for the rest of April. (For additional reading, check out: What to Expect From the Markets in Q2.)
Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.