Brocker.Org: Stocks Fall as Political Turmoil Grips the U.S. (SPY, DIA)

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The major U.S. indexes moved lower over the past week, as of mid-day Friday, amid concerns over President Trump’s alleged interference in an FBI investigation of Michael Flynn and Trump’s potential scandal with the Russians. Apart from these issues, recent economic indicators suggest the economy is continuing to grow. Industrial production came in at a higher-than-expected 1% gain in April while jobless claims remained at record lows.

International markets were mixed over the past week. Japan’s Nikkei 225 fell 1.46%; Germany’s DAX 30 fell 1.03%; and, Britain’s FTSE 100 rose 0.4%. In Europe, the Eurozone economy posted a 0.5% growth rate during the first quarter, which exceeded the U.S. but remains weaker than many expected. In Asia, China reported poor spending and activity data that caused concerns of a slowdown, but the government hinted that it might implement new stimulus.

The SPDR S&P 500 (ARCA: SPY) fell 0.10% over the past week, as of mid-day Friday, making it the best-performing major index. After briefly breaking down below its 50-day moving average at $236.60, the index rebounded higher toward its upper trend line and R1 resistance at $240.90. Traders should watch for a breakdown from these levels to R2 resistance at $243.73 or a move lower to re-test lower trend line and S1 support levels at $233.88. Looking at technical indicators, the RSI has moderated to 53.99, while the MACD experienced a bearish crossover that could signal further downside ahead.

The SPDR Dow Jones Industrial Average (ARCA: DIA) fell 0.48% over the past week, as of mid-day Friday. After dipping below the 50-day moving average at $206.87, the index rebounded toward upper trend line resistance at $210.00. Traders should watch for a breakout from these levels to R1 resistance at $211.23 or a move lower to re-test S1 support at $204.28. Looking at technical indicators, the RSI appears neutral at 52.01 while the MACD recently experienced a bearish crossover that could signal downside ahead.

The PowerShares QQQ Trust (NASDAQ: QQQ) fell 0.22% over the past week, as of mid-day Friday. After briefly moving toward its lower trend line support, the index rebounded to R1 resistance at $138.25. Traders should watch for a breakout to the upper trend line and R2 resistance at $140.20 or a move lower to re-test lower trend line support at around $136.00. Looking at technical indicators, the RSI appears a bit lofty at 61.23, but the MACD experienced a bearish crossover that could signal downside ahead.

The iShares Russell 2000 Index ETF (ARCA: IWM) fell 0.74% over the past week, as of mid-day Friday, making it the worst performing major index. After rebounding from lower trend line and S1 support at $134.54, the index moved toward the 50-day moving average at $136.89. Traders should watch for a breakout to the pivot point at $138.18 or a move lower to re-test its lower support levels. Looking at technical indicators, the RSI appears neutral at 45.65 while the MACD remains in a bearish downtrend.

The Bottom Line

The major U.S. indexes moved lower over the past week, as of mid-day Friday, although they posted a late-week recovery. Next week, traders will be closely watching several economic indicators, including new home sales on May 23, existing home sales on May 24, jobless claims on May 25, and GDP data on May 26. The market will also be keeping a close eye on further developments in the Trump Administration’s political drama. (For more Trump coverage, see: Donald Trump).

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

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