The major U.S. indexes moved higher over the past week, led by technology stocks and lagged by industrials. The leading economic index rose 0.3% in May, according to the Conference Board, suggesting that the overall economy remains strong. Notably, the housing sector rebounded with a 1.1% increase in existing home sales to a higher-than-expected 5.620 million rate, while jobless claims were little changed from their strong prior showing.
International markets were mixed over the past week. Japan's Nikkei 225 rose 0.97%; Germany's DAX 30 fell 0.15%; and Britain's FTSE 100 fell 0.43%. In Europe, IHS Markit's June flash purchasing managers' composite dipped to 55.7 in May, but it remains well above the 50 mark that would indicate a contraction. In Asia, Japan offered the first upbeat assessment of its economy since December in a sign of improvement. (See also: The Importance of the Purchasing Managers' Index.)
The S&P 500 SPDR (ARCA: SPY) rose 0.2% over the past week. After briefly touching upper trendline resistance, the index moved lower to R1 support at $242.69. Traders should watch for a rebound to retest upper trendline and R2 support at $245.10 or a breakdown to the 50-day moving average or pivot point at $238.49. Looking at technical indicators, the relative strength index (RSI) remains relatively neutral at 59.87, while the moving average convergence divergence (MACD) has started a bearish crossover that could indicate downside ahead for the index.
The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 0.08% over the past week, making it the worst performing major index. After briefly breaking out from R2 resistance at $214.00, the index moved lower toward R1 support at $211.81. Traders should watch for an ongoing move lower to those levels or a rebound to re-test its upper trendline resistance and all-time highs. Looking at technical indicators, the RSI appears overbought at 65.41, while the MACD could be on the verge of a bearish crossover. (For more, see: Top 3 ETFs That Track the Dow.)
The PowerShares QQQ Trust (NASDAQ: QQQ) rose 2.24% over the past week, making it the best performing major index. After rebounding from its lower trendline support, the index continued to move toward R1 resistance at $143.07. Traders should watch for a move to those levels or R2 resistance at $145.24, or a move lower to re-test its lower trendline and pivot point at $139.29. Looking at technical indicators, the RSI appears neutral at 57.12, while the MACD is on the verge of a bullish crossover.
The iShares Russell 2000 Index ETF (ARCA: IWM) rose 0.51% over the past week. After briefly hitting R1 support at $139.70, the index rebounded toward the upper end of its price channel this week. Traders should watch for an ongoing move to upper trendline and R2 resistance at $143.07 or a move lower to the 50-day moving average at $138.59. Looking at technical indicators, the RSI appears neutral at 56.74, while the MACD has been trending sideways, which provides traders with few hints into future price action. (See also: IWM: iShares Russell 2000 Index ETF.)
The Bottom Line
The major U.S. indexes moved higher over the past week thanks to the strong recovery in the tech sector. Next week, traders will be closely watching several key economic indicators, including consumer confidence data on June 27, pending home sales on June 28, GDP data on June 29 and personal income data on June 30. The market will also be keeping a close eye on any political developments in the United States and around the world. (For related reading, check out: ETFs With Major Recent Breakouts.)
Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.