The Weekly Report For January 14th – January 18th

 

Commentary

The markets in the United States moved largely higher this week, with the exception of the Nasdaq, following relatively upbeat earnings. Bank earnings were among the most watched this past week, with commercial bank earnings projected to grow 39% in aggregate this quarter. Gun sellers also experienced a jump after President Obama outlined plans to enhance gun control laws. But ultimately, concerns over the debt ceiling and the U.S. credit rating kept stocks subdued.

International markets fared significantly better this week, despite new data showing that Germany’s economy contracted in the fourth quarter and Britain’s economy entered a triple-dip recession. Top gainers included the Nikkei 225, which soared due to the introduction of new stimulus and the promise of a lower yen, and the Shanghai Composite, which both rose more than 14% on the week due to favorable macroeconomic trends.

S&P 500 SPDR ETF (ARCA:SPY)
 

The S&P 500′s SPDR (ARCA:SPY) ETF rose by about a third of a point this week, as the nervousness of investors balanced favorable bank earnings. After breaking through prior highs last week, the index continued its move higher past the key R2 pivot point level. Traders should watch for a move higher to the next resistance at around 148.61 or a move down to support at around 146.39 at the prior high turned support level. Looking at technical indicators, the relative strength index (RSI) remains at a relatively high 65.30, suggesting overbought conditions, while the moving average convergence divergence (MACD) remains in a bullish trend, but has weakened considerable this week.

SEE: A Primer On The MACD

 

 

Dow Jones Industrial Average SPDR (ARCA:DIA)
 

The Dow Jones Industrial Average’s SPDR (ARCA:DIA) ETF followed the same path as the SPY index, with relative indecision on the part of investors. After breaking through its own prior high last week, the index was trading roughly around its R2 pivot point resistance level at around 135.59 for the week. Traders should watch for a potential breakout higher to its next resistance at 136.35 or a break down to support levels at around 134.40. When it comes to technical indicators, the RSI shows overbought conditions with a 64.50 reading, while the MACD remains in a bullish uptrend dating back to mid-November last year.

 

 

PowerShares QQQ ETF (Nasdaq:QQQ)
 
 

The PowerShares QQQ (Nasdaq:QQQ ETF followed the same path as the SPY index, with relative indecision on the part of investors. After breaking through its own prior high last week, the index was trading roughly around its R2 pivot point resistance level at around 135.59 for the week. Traders should watch for a potential breakout higher to its next resistance at 136.35 or a break down to support levels at around 134.40. When it comes to technical indicators, the RSI shows overbought conditions with a 64.50 reading, while the MACD remains in a bullish uptrend dating back to mid-November last year.

 

iShares Russell 2000 Index (ARCA:IWM)
 

The iShares Russell 2000 Index (ARCA:IWM) ETF continues to outperform all of the other major U.S. indexes, as it has over the past 52-weeks. The index continued its rise this past week, jumping above its R2 pivot point resistance level at 87.12 in a near parabolic rise since mid-November. Traders should watch for a breakout of its next weekly R1 pivot point resistance level at around 88.84 or a breakdown below its S1 support level at 87.38. From a technical indicator point of view, the index looks sharply overbought with a 72.68 reading on the RSI and is nearing a bearish crossover on its MACD readings.

SEE: The Anatomy Of Trading Breakouts

 

  The Bottom Line  

The major U.S. indexes were largely mixed this week amid bullish bank earnings and bearish concerns about the debt ceiling. Next week, traders will be in for much of the same in addition to existing home sales data out on Tuesday, jobless claims due out Thursday and new homes sales data due out on Friday of next week.

Charts courtesy of stockcharts.com

At the time of writing, Justin Kuepper did not own shares in any of the companies mentioned in this article.

5-Year Treasury 0.77 0 0.00%
10-Year Treasury 1.84 0 0.00%
30-Year Treasury 3.03 0 0.00%

 

Earnings Preview for the week of Jan 22 – 25 : Of the companies reporting earnings for the week of January 22 – 25 some of the bigger names include:

  • Tuesday: CNI, DAL, DD, FCX, JNJ, KSU, PKG, RF, TRV, VZ, WAT, AMD, ALB, CA, CLS, CSX, GOOG, IBM, ISRG, NSC, RKT, TXN
  • Wednesday: ABT, ABBV, APD, ATI, BHI, COH, GD, MCD, MSI, NVS, PX, DGX, SAP, STJ, TEL, TXT, UTX, LCC, WLP, AMGN, AAPL, JEC, FFIV, NFLX, NE, SNDK, SYMC, URI, WDC
  • Thursday: MMM, ARG, ALK, ABC, AVT, BAX, BMY, CELG, DOV, KEY, KMT, MDP, NOK, PCP, RTN, LUV, SWK, UNP, UAL, GWW, XRX, T, ED, FLEX, JNPR, MSFT, SBUX
  • Friday: COV, HAL, HON, KMB, PG, WY

  

 

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