US Stocks Edge Higher Ahead of a Big Week

The major U.S. indexes moved higher over the past week despite weak new and existing home sales. New home sales fell to a sharply lower-than-expected annualized rate of 571,000, while existing home sales fell 1.3% to an annualized rate of 5.44 million. The primary driver behind the stock market rally has been better-than-expected second quarter earnings, higher expectations for tax reform and more dovishexpectations for the Federal Reserve.

International markets moved lower over the past week. Japan’s Nikkei 225 fell 0.09%; Germany’s DAX 30 rose 0.02%; and Britain’s FTSE 100 rose 1.2%. In Europe, the European Central Bank’s plans to phase out its massive stimulus program early next year could slow down the region’s strong recovery. In Asia, economists are concerned that a crackdown on backdoor borrowing by local governments in China could put a drag on growth. (See also: Time to Buy Alibaba Bonds? BofA Merrill Thinks So.)

The SPDR S&P 500 ETF  rose 0.76% over the past week, as prices have trended sideways around the 50-day moving average at $244.76. Traders should watch for a breakout toward R1 resistance at $249.73 or a breakdown to test lower trendline and S1 support at around $242.00. Looking at technical indicators, the relative strength index (RSI) is neutral at 47.63, while the moving average convergence divergence (MACD) remains in a bearish crossover dating back to early August but could see a bullish crossover in the near future. (For more, see: Dividend and Large Cap: 2 ETFs to Watch on Outsized Volume.)

 

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Category: SPY, DIA, IWM, QQQ

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