The major stock market indices moved higher during the first week of trading in the new year. While Trumponomics boosted stocks early in the week, moderately, positive payroll data pushed them to the finish line in positive territory. The economy added 156,000 new jobs last month, which was down from an upwardly revised 204,000 in November. However, wages rose at the fastest annual pace since 2009 at a 2.9% clip thanks in large part to the tech sector.

International markets followed the U.S. markets lower over the past week. Japan’s Nikkei 225 rose 0.79%; Germany’s DAX 30 rose 1.03%; and, Britain’s FTSE 100 rose 1.22%. In Europe, the manufacturing sector picked up steam in December with Eurozone PMI rising to 54.9 from 53.7 in the previous month. In Asia, Chinese analysts expect the country’s economy to grow at a 6.5% to 6.7% pace in 2017, but rising debt remains a critical concern for the emerging market.

The S&P 500 SPDR (ARCA: SPY) rose 1.64% over the past week. After breaking through its prior highs, the index rose to its R1 resistance at $227.73 before giving up some ground towards the end of the week. Traders should watch for a breakout to R2 resistance at $231.94 or a move lower to re-test its pivot point at $222.80. Looking at technical indicators, the RSI is overbought at around $65.69, while the MACD experienced a bearish crossover that could signal downside ahead.

SPY Chart

The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 1.01% over the past week. After rebounding from its reaction lows, the index moved toward its prior highs near the psychologically-important $200.00 level. Traders should watch for a breakout from these levels to R1 resistance at $201.08 or a move lower to re-test its pivot point at $196.04. Looking at technical indicators, the RSI appears overbought at 70.75, while the MACD remains in a bearish trend.

DIA Chart

The PowerShares QQQ Trust (NASDAQ: QQQ) rose 2.91%, making it the best performing major index. After breaking out from its trend line resistance, the index surpassed its R1 resistance at $121.71 before moving a bit lower. Traders should watch for an ongoing breakout to R2 resistance at $124.93 or a move lower to re-test its pivot point and lower trend line support. Looking at technical indicators, the RSI appears a bit lofty, while the MACD is trending sideways.

QQQ Chart

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 0.62%, making it the worst performing major index. After nearly touching its prior highs, the index moved modestly lower toward its pivot point. Traders should watch for a rebound to R1 resistance at $138.81 or a move lower to its pivot point at $134.28. Looking at technical indicators, the RSI appears neutral at around 55.25, while the MACD remains in a long-term bearish downtrend.

IWM Chart

The Bottom Line

The major market indices moved higher over the past week, but technical indicators suggest that the rally may be temporary. Next week, traders will be watching several key economic indicators including jobless claims on Jan. 12 and retail sales on Jan. 13, as well as Janet Yellen’s speaking engagement on Jan. 12.

Charts courtesy of StockCharts.com.

As of the time of writing, the author had no holdings in the securities mentioned.

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