The markets in the United States ended the week on a mixed
note, as a number of key economic reports hit the wire. The DJIA and S&P
500 both ended the week higher, the Nasdaq moved lower on Apple (Nasdaq:AAPL)
weakness, and the Russell 2000 moved marginally lower as well. These indexes
were primarily influenced by a drop in U.S. manufacturing and ADP employment
earlier in the week, which was offset by bullish U.S. jobless claims and U.S.
non-manufacturing data.
Global markets fared somewhat better this week. Japan's
Nikkei 225 moved higher as traders bet that more quantitative easing would be
put in place by a projected victory by the Liberal Democratic Party. European
stocks were favorably influenced by the U.S. jobs data, but continue to see
some downward pressure from the ECB's reduced growth outlook for the region,
which slipped back into a recession with a 0.1% GDP contraction last quarter.
The S&P 500 SPDR (ARCA:SPY) ETF moved marginally higher
this week, after briefly breaking out through its 50-day moving average.
Despite the breakout, traders remain undecided about the direction of the
index, with low volume trading hovering near the level towards the end of the
week. Bullish traders should look for a high volume, sustained breakout from
the 50-day moving average with potential upside limits at around $147. Bearish
traders should watch for a breakdown of the moving average, confirmed by a
moving average convergence divergence (MACD) crossover, with downside support
at the 200-day moving average of around $137.97 and a lower trendline support
at around $137
. 
The Dow Jones Industrial Average SPDR (ARCA:DIA) ETF moved
marginally higher this week, after breaking out from its 50-day moving average
at $130.96. While the breakout has held above the key moving average, traders
should be cautious given the low volume and additional near-term upside
resistance. Bullish traders should watch for a high volume breakout of these
levels at around $132, with potential upside limits at around $135.75. Bearish
traders should watch for a move back below these levels, boosted by a loftier
relative strength index and potential bearish MACD crossover, with downside
support at the 200-day moving average of $128.56.
The PowerShares QQQ (Nasdaq:QQQ) ETF moved lower this
week amid ongoing weakness in Apple - the largest component of the index. The
index trades below its 50-day moving average at $68.82 and its 200-day moving
average at $65.36, while a crossover of these two moving averages could signal
a secular shift from a bull market to a bear market. Bullish traders should
watch for a breakout of these two moving averages on high volume, as it could
lead to a move up to resistance at around $71. Bearish traders should watch for
a breakdown below the key support level at around $64.50, with the next support
being at around $61.75.
The iShares Russell 2000 Index (ARCA:IWM) ETF moved marginally lower this week, but remained above its 50-day moving average at around $81.59. The index appears to be consolidating ahead of a move higher or lower. Bullish traders should watch for a high volume move higher from these levels towards resistance levels at around $86. Bearish traders should watch for a breakdown from the 50-day moving average of $81.59 and a key trendline at around the same levels, with lower support at the 200-day moving average at $80.06.
SEE: Support & Resistance Basics
The major U.S. indexes ended the week on a mixed note,
divided largely by shares in technology companies that underperformed the
market. Many of the indexes also stand at key levels that could set the stage
for breakouts or breakdowns next week. Looking ahead, traders will be watching
several key economic indicators, including International Trade on December 11,
Jobless Claims, Retail Sales and the Producer Price Index on December 13 and
the Consumer Price Index and Industrial Production on December 14.
COURTESY BY STOCK CHART.COM
