Stocks Move Lower Amid Rising Risk

The major U.S. indexes moved lower over the past week, with the exception of small-cap stocks posting modest gains. Industrial production rose a better-than-expected 0.5% in March, but jobless claims were slightly less favorable than many economists were expecting, and the risk of an escalating trade war with China continues to weigh on the market. There is also rising political risk as details from Robert Mueller's investigation emerge.

International markets were lower over the past week. Japan's Nikkei 225 rose 1.46%; Germany's DAX 30 rose 0.49%; and Britain's FTSE 100 rose 1.49%. In Europe, stocks ended the week higher despite worries about Syria and U.S.-China tension. In Asia, traders remain concerned about a potential trade war between the U.S. and China, although Japan has not announced any counter-tariffs at the moment. (For more, see: Stocks That Could Be Hit by a Trade War With China.)

The SPDR S&P 500 ETF (ARCA: SPY) fell 0.13% over the past week. After briefly reaching trendline resistance, the index moved to the pivot point support at $266.61. Traders should watch for a breakdown from these levels to test trendline support at around $259.00 or a move higher to retest upper trendline resistance. Looking at technical indicators, the relative strength index (RSI) appears neutral at 50, but the moving average convergence divergence (MACD) experienced a bullish crossover and remains in an uptrend.

The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) fell 0.26% over the past week, making it the worst performing major index. After briefly breaking out from upper trendline resistance, the index moved back lower to pivot point support at $243.37. Traders should watch for a rebound higher toward R1 resistance at $252.02 or a breakdown from the pivot point toward lower trendline and 200-day moving average support at $243.39. Looking at technical indicators, the RSI appears neutral at 50.17, but the MACD remains in an uptrend. (See also: How Now, Dow? What Moves the DJIA?)

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The Invesco QQQ Trust (NASDAQ: QQQ) fell 0.12% over the past week. After breaking out from pivot point levels early in the week, the index retraced lower. Traders should watch for a further breakdown to lower trendline and 200-day moving average support at around $153.83 or a rebound to retest upper trendline resistance at $165.00. Looking at technical indicators, the RSI appears neutral at 48.98, but the MACD remains in a bullish uptrend.

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 0.46% over the past week, making it the best performing major index. After briefly touching R1 resistance at $158.49, the index moved lower toward the pivot point and 50-day moving average at $153.18. Traders should watch for a rebound higher to retest R1 resistance or upper trendline resistance at $160.00 or a breakdown to test the pivot point or lower trendline support at around $149.00. Looking at technical indicators, the RSI appears neutral at 54.05, but the MACD remains in an uptrend.

The Bottom Line

The major indexes moved lower over the past week, but MACD trends still suggest a positive trend moving forward. Next week, traders will be closely watching several key economic indicators, including new home sales on April 24, jobless claims on April 26 and GDP data on April 27. Traders will also be keeping a close eye on evolving political risks and the potential escalation of the trade conflict with China. (For additional reading, check out: Inflation Is 'Mother of all Risks': Deutsche Bank.)

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