The major U.S. stock market indexes moved sharply lower over the past week amid uncertainty surrounding the elections and rising odds of a December rate hike. Despite the bearish stock market performance, the underlying economy showed signs of strength as employers maintained a strong pace of hiring and boosted wages in October, according to the Labor Department.
International markets followed the U.S. markets lower over the past week. Japan’s Nikkei 225 fell 2.74%; Germany’s DAX 30 fell 4.09%; and, Britain’s FTSE 100 fell 4.31%. In Europe, Germany’s HIS Markit Purchasing Managers Index rose to 53.3, as the country continues to be a driving force for the region. In Asia, economists expect Japan’s economy to show signs of improvement but growth remains fragile.
The S&P 500 SPDR (ARCA: SPY) fell 1.87% over the past week. After breaking down from its S1 support at $210.27, the index is trading just above its lower trend line and S2 support at $208.00. Traders should watch for a breakdown from these levels towards the 200-day moving average at $206.72 or a rebound higher to retest its S1 support. Looking at technical indicators, the RSI is oversold at 29.33, while the MACD moved further into bearish territory.
The Dow Jones Industrial Average SPDR (ARCA: DIA) fell 1.46% over the past week, making it the best performing major index. After breaking down from its trend line support, the index is trading near S1 support at $179.06. Traders should watch for a breakdown to S2 support at $176.95 or a rebound to its pivot point at $181.36. Looking at technical indicators, the RSI appears a bit oversold at 35.06, while the MACD moved deeper into bearish territory.
The PowerShares QQQ Trust (NASDAQ: QQQ) fell 2.96% over the past week, making it the worst performing major index. After breaking below its S1 support at $115.04, the index moved swiftly to its S2 support at $113.81. Traders should watch for a breakdown toward its 200-day moving average at $110.15 or a rebound to re-test its S1 support. Looking at technical indicators, the RSI appears oversold at 29.61, but the MACD took a steeper turn downwards.
The iShares Russell 2000 Index ETF (ARCA: IWM) fell 1.94% over the past week. After breaking below key support levels at $118.00, the index moved nearby its S1 support at $115.92. Traders should watch for a further move lower to the 200-day moving average at $113.74 or a rebound to re-test the $118.00 resistance level. Looking at technical indicators, the RSI appears oversold at 31.62, while the MACD moved deeper into negative territory.
The Bottom Line
The major indexes moved sharply lower over the past week, although RSI indicators suggest oversold conditions. The S&P has been in a slump for the last nine days, amidst much uncertainty. Next week, traders will be closely watching a number of key economic events including jobless claims on Nov. 10 and consumer sentiment data on Nov. 11. Most importantly, the U.S. Presidential elections on November 8 will be closely watched as the elections results will ultimately impact the election.
Charts courtesy of StockCharts.com.
As of the time of writing, the author had no holdings in the securities mentioned.
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