Strong Economic Data Fail to Offset Profit Taking in Stocks – TheTradersWire

Strong Economic Data Fail to Offset Profit Taking in Stocks

 

Strong Economic Data Fail to Offset Profit Taking in Stocks

By Justin Kuepper | November 18, 2017 — 11:22 AM EST

The major U.S. indexes were mixed over the past week. While retail sales hit expectations with a 0.2% jump in October, the gains were largely due to auto purchases in hurricane-hit states. The good news is that industrial production exceeded expectations with a 0.9% increase, and most of that was due to a strong 1.3% gain in manufacturing. The housing market also experienced strong gains, with more housing starts in October than expected.

International markets were lower over the past week. Japan’s Nikkei 225 fell 1.25%; Germany’s DAX 30 fell 1.02%; and Britain’s FTSE 100 fell 0.67%. In Europe, Angela Merkel’s party posted its weakest election results since 1949 as the far-right Alternatives for Germany part gained traction. In Asia, Moody’s upgraded India’s bond ratings, saying that the government has made solid progress in both economic and institutional reform. (See also: India’s Modi Hopes Tax Reform Will Convince US CEOs to Invest.)

The SPDR S&P 500 ETF (ARCA: SPY) fell 0.09% over the past week. After reaching all-time highs near R1 resistance at $259.60 earlier this month, the index moved lower to retest pivot point support at $255.44 this week before rebounding. Traders should watch for a breakout from R1 resistance at $259.60 to trendline resistance or a move lower to trendline support. Looking at technical indicators, the relative strength index (RSI) moderated to neutral levels at 56.67, while the moving average convergence divergence (MACD) remains in a bearish downtrend dating back to earlier this month.

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

The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) fell 0.44% over the past week, making it the worst performing major index. Since reaching all-time highs earlier this month, the index has moved lower to bounce along trendline support. Traders should watch for a rebound to R1 resistance at $237.04 or a breakdown to pivot point support at $230.17. Looking at technical indicators, the RSI is neutral at 57.76, but the MACD remains in a downtrend dating back to earlier this month.

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

The PowerShares QQQ Trust (NASDAQ: QQQ) rose 0.18% over the past week. After moving off of R1 resistance at $154.70 earlier this month, the fund moved higher to retest those levels this week. Traders should watch for a breakout to upper trendline resistance at $156.00 or a move lower to retest trendline support at around $151.00. Looking at technical indicators, the RSI appears a bit lofty at 64.34, but the MACD could be on the verge of a bearish crossover that could signal more downside ahead. (For more, see: Big Tech Stocks Poised to Rise in 2018 on Earnings.)

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

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 1.28% over the past week, making it the best performing major index. After rebounding from S2 support at $145.59, the index rebounded to retest its pivot point at $149.05 this week. Traders should watch for a breakout to trendline and R1 resistance at $150.89 or a move lower to retest S2 support at $145.59. Looking at technical indicators, the RSI appears neutral at 55.22, but the MACD could be on the verge of a bullish crossover after a prolonged downtrend.

 IWM)

The Bottom Line

The major indexes were mixed over the past week, but technical indicators have moved off of overbought levels. Next week, traders will be closely watching many economic indicators, including existing home sales on Nov. 21 and FOMC​ minutes on Nov. 22. The market will also be keeping a close eye on geopolitical events in Germany and the United States that could influence the markets. (For additional reading, check out: US Stocks Poised for 10% Holiday Drop: Raymond James.)

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

Published at Sat, 18 Nov 2017 16:22:00 +0000

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