The major stock market indexes moved higher during a trading week that was shortened by the Thanksgiving holiday. In the latest signs of a strengthening economy, new orders for manufactured goods and consumer sentiment indicators both increased in October. Consumers appear confident that Trumponomics will be a net positive for their personal finances and the domestic economy.
International markets followed the U.S. markets lower over the past week. Japan’s Nikkei 225 rose 5.8%; Germany’s DAX 30 rose 0.33%; and, Britain’s FTSE 100 rose 0.92%. In Europe, business activity grew at its strongest pace this year in November, which prompted companies to hire at their fastest pace since 2008. In Asia, Japan posted strong 2.2% GDP growth during the third quarter thanks to strong exports.
The S&P 500 SPDR (SPY) rose 1.37% over the past week. After breaking out from its trend line resistance, the index moved past its R2 resistance to new highs. Traders should watch for an ongoing move higher or a retracement back to its R2 support at $218.08. Looking at technical indicators, the RSI ventured into overbought territory at 70.89, while the MACD continues to exhibit a positive bias after its bullish crossover in early November.
The Dow Jones Industrial Average SPDR (DIA) rose 1.51% over the past week. After breaking out from its upper trend line resistance, the index moved sharply past its R2 resistance to new highs. Traders should watch for an ongoing move higher or a retracement back to R2 support at $125.26. Looking at technical indicators, the RSI appears very overbought at 77.89, while the MACD remains in a bullish uptrend that dates to early November.
The PowerShares QQQ Trust (QQQ) rose 1.26% over the past week, making it the worst performing major index. After breaking out from its 50-day moving average at $117.51, the index briefly touched its R1 resistance at $119.12 before giving up some ground. Traders should watch for a breakout to its R2 resistance at $121.25 or a move down to its 50-day moving average. Looking at technical indicators, the RSI appears neutral and the MACD is modestly bullish.
The iShares Russell 2000 Index ETF (ARCA: IWM) rose 2.35% over the past week, making it the best performing major index. After breaking out from its R2 resistance at $127.32, the index extended its gains past its upper trend line resistance. Traders should watch for the index to make new highs or retrace back to its support trend line at $132.00. Looking at technical indicators, the RSI appears extremely overbought at 80.05 while the MACD remains very bullish since early November.
The Bottom Line
The major markets moved higher over the shortened trading week, but some technical indicators suggest overbought conditions. Next week, traders will be watching several key economic indicators, including consumer sentiment on November 29, personal incomes on November 30, manufacturing data on December 1, and employment data on December 2.
Charts courtesy of StockCharts.com.
As of the time of writing, the author had no holdings in the securities mentioned.
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