ChartAdvisor 3/27/16 (SPY,DIA)

By Anthony Jerdine| March 27, 2016

The U.S. markets moved lower over the past week, as of Thursday’s close, with the steepest declines coming from small-cap stocks in the Russell 2000. With crude oil prices falling nearly 4%, hopes that the crude market rally could save struggling U.S. oil producers were dashed by record levels of supply build-up. There is also growing concern over the weakening of U.S. manufacturing, particularly amid dovish monetary policy decisions out of the European Central Bank (ECB) and Bank of Japan (BOJ).

International markets were mixed over the past week, as of Thursday’s U.S. close. Japan’s Nikkei 225 rose 1.3%; Germany’s DAX 30 fell 1%; and, Britain’s FTSE 100 fell 1.2%. In Europe, Markit PMI readings picked up in March in a sign that the region avoided a further slowdown in March. In Asia, China has shown some signs of strength during the first quarter of this year, although regulators believe that there’s still a lot of reforms that need to be pushed through to grow.

 

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The S&P 500 SPDR (ARCA: SPY) fell 0.69% over the past week, as of Thursday’s close. After briefly touching its R2 resistance at 204.98, the index moved lower toward its trend line support. Traders should watch for a breakdown toward the 200-day moving average at 199.58 or a rebound to retest its R2 resistance. Looking at technical indicators, the RSI remains overbought at 63.75, while the MACD could see a bearish crossover over the near-term.

SPY Chart

The Dow Jones Industrial Average SPDR (ARCA: DIA) fell 0.43% over the past week, as of Thursday’s close. After briefly breaking through its R2 resistance at 175.42, the index retreated toward its trend line support. Traders should watch for a breakdown to R1 support at 170.01 or a rebound higher to retest its prior highs just above its R2 resistance. Looking at technical indicators, the RSI is overbought at 68.36, while the MACD could be coming to the end of an uptrend.

DIA Chart

The PowerShares QQQ Trust (NASDAQ: QQQ) fell 0.1% over the past week, as of Thursday’s close. After briefly breaking above its 200-day moving average, the index fell lower toward its R1 support at 106.27. Traders should watch for a rebound toward R2 resistance at 110.35 or a move lower toward its 50-day moving average at 102.81. Looking at technical indicators, the RSI appears modestly overbought, while the MACD may experience a bearish crossover.

QQQ Chart

The iShares Russell 2000 Index ETF (ARCA: IWM) fell 2.23% over the past week, as of Thursday’s close. After nearly reaching its R2 resistance at 110.19, the index fell to its R1 support at 106.03 and has remained near those levels. Traders should watch for a rebound to its R2 resistance or a drop to its trend line support at around 102.50. Looking at technical indicators, the RSI remains neutral at 55.42, but the MACD could see a near-term bearish crossover.

IWM Chart

The Verdict
The major indexes moved lower over the past week, as of Thursday’s close, but many still appear overbought based on their RSI readings. Next week, traders will be closely watching several important economic reports, including crude oil inventories on March 30 and employment data on April 1.

 

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