Stocks Give Up Gains Since Election in Volatile Week

The major U.S. indexes moved sharply lower over the past week, reaching levels that haven’t been seen since before the 2016 presidential election. Despite strong earnings and economic data, the market has grown increasingly concerned over the prospect of inflation and rising interest rates. Yields on 30-year Treasury bonds have risen from 2.81% at the beginning of the year to 3.14% last week, while average hourly earnings posted a better-than-expected 2.9% increase in the latest nonfarm payrolls report.

International markets were lower over the past week. Japan’s Nikkei 225 fell 8.16%; Germany’s DAX 30 fell 5.3%; and Britain’s FTSE 100 fell 4.91%. In Europe, stocks experienced the worst sell-off since the Brexit vote amid concerns that the European Central Bank would cut back on stimulus and raise interest rates. In Asia, Japanese stocks were among the worst performers in the world, but most investors remain positive on the economy. Meanwhile, China’s economy bucked the trend in the developed world with a cooling rate of inflation.

The SPDR S&P 500 ETF  fell 5.05% over the past week. After breaking down from several support levels, the index stabilized above S2 support at $259.41 by the end of the week. Traders should watch for a rebound from these levels to retest upper trendline, S1 resistance and 50-day moving average levels at $271.12 or a breakdown to test the 200-day moving average at $251.86. Looking at technical indicators, the relative strength index (RSI) fell sharply from overbought levels to oversold levels at 35.35, while the moving average convergence divergence (MACD) experienced a sharp bearish crossover that could signal more downside ahead before any improvements. (See also: A Stock Sell-Off Vocabulary Guide.)

 

In a chaotic week on Wall Street, the major U.S. indexes moved sharply lower. …read more

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Category: SPY, DIA, QQQ, IWM

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