The major U.S. indexes moved largely higher over the past week, with the exception of tech stocks, which weighed down the NASDAQ. On Wednesday, the U.S. Federal Reserve left interest rates unchanged but warned that it still expected to increase rates one more time by year end, despite low inflation. The central bank also warned that it would reduce its $4.2 trillion balance sheet, citing low unemployment, business investment growth and economic expansion. However, inflation remains a key concern among investors and central bank officials.

International markets followed U.S. markets higher over the past week. Japan's Nikkei 225 rose 0.88%; Germany's DAX 30 rose 0.59%; and Britain's FTSE 100 rose 1.26%. In Europe, the highly watched IHS Markit survey found that economic activity rose to a four-month high in September, which could spur the European Central Bank to take hawkish action. In Asia, S&P Global Ratings downgraded China's sovereign credit rating, saying that credit growth continues to move too quickly despite efforts to curb lending. (See also: A Brief History of Credit Rating Agencies.)

The SPDR S&P 500 ETF (ARCA: SPY) rose 0.02% over the past week. After breaking through R1 resistance levels at $249.09 earlier this month, the index remained marginally above those levels through the past week. Traders should watch for a breakout to test upper trendline and R2 resistance at $251.91 or a breakdown to the 50-day moving average at $245.76. Looking at technical indicators, the relative strength index (RSI) is close to overbought levels at 64.61, but the moving average convergence divergence (MACD) remains in a bullish uptrend that has only slightly lost steam.

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

The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) rose 0.27% over the past week. After breaking through R1 resistance earlier this month, the index recently reached R2 resistance at $223.75. Traders should watch for a breakout from these levels toward upper trendline resistance or a breakdown back to R1 resistance or lower trendline and pivot point support at around $218.00. Looking at technical indicators, the RSI appears close to overbought levels, but the MACD remains in a strong bullish uptrend. (For more, see: Why the Dow Matters.)

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

The PowerShares QQQ Trust (NASDAQ: QQQ) fell 1.23% over the past week, making it the worst performing major index. Over the past month, the index has been moving largely sideways just above its pivot point at $143.88. Traders should watch for a breakout higher toward R1 resistance at $147.89 or a breakdown from these levels to lower trendline support at around $142.00. Looking at technical indicators, the RSI appears neutral at 49.85, but the MACD experienced a bearish crossover that could signal downside ahead. (See als: US Tech Funds See Largest Inflows Since 2006.)

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

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 1.36% over the past week, making it the best performing major index. After breaking out from R1 resistance at $143.25, the index continued to trend higher and experienced a bullish engulfing on Friday. Traders should watch for a breakout higher toward upper trendline and R2 resistance at $146.76 or a breakdown lower toward the 50-day moving average at $140.10. Looking at technical indicators, the RSI is overbought at 71.78, but the MACD remains in a strong bullish uptrend.

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

The Bottom Line

The major indexes moved largely higher over the past week, although the PowerShares QQQ Trust could see an intermediate-term downtrend. Next week, traders will be keeping a close eye on new home sales data on Sept. 26, GDP data on Sept. 28 and consumer sentiment data on Sept. 29. Of course, the market will also be closely monitoring the evolving political situation in Washington and overseas. (For additional reading, check out: Leading Economic Indicators Predict Market Trends.)

Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.

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