Stocks Mixed After Weak Energy Prices Offset Strong Earnings

The major U.S. indexes were mixed over the past week. Reports that OPEC and Russia are ready to increase production amid concerns over a slowdown in Iran and Venezuela pushed down WTI crude oil prices sharply to less than $70.00 per barrel. The Energy Select Sector SPDR ETF (XLE) responded by moving more than 5% lower over the course of the week. On the plus side, FactSet's Earnings Insight showed that more than three-quarters of companies in the S&P 500 reported positive revenue and earnings surprises last quarter.

International markets were lower over the past week. Japan's Nikkei 225 fell 2.12%, Germany's DAX 30 fell 1.48%; and Britain's FTSE 100 fell 0.88%. In Europe, Spain's opposition Socialist party called for a vote of no confidence on Prime Minister Mariano Rajoy, while Italy's populist Prime Minister candidate was presented to President Sergio Mattarella. In Asia, President Trump's abrupt termination of the North Korea summit sent shares lower, but his decision to keep the possibilities open a day later led to a modest recovery. (See also: Stocks Take a Hit on Trump’s Summit Cancellation.)

The SPDR S&P 500 ETF (ARCA: SPY) fell 0.29% over the past week. After breaking out from upper trendline resistance earlier this month, the index has trended sideways near its R1 resistance levels at $272.32 for the past week or so. Traders should watch for a breakout from these levels to test upper trendline and R2 resistance at $280.12 or a breakdown to retest trendline and 50-day moving average support at $266.95. Looking at technical indicators, the relative strength index (RSI) appears neutral at 56.80, but the moving average convergence divergence (MACD) could see a near-term bearish crossover.

The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) fell 0.74% over the past week, making it the worst performing major index. After breaking out from a descending triangle pattern, the index briefly broke out from R1 resistance at $248.20 before trending sideways. Traders should watch for a breakout from upper trendline resistance to R2 resistance at $255.54 or a breakdown to retest the 50-day moving average at $243.24. Looking at technical indicators, the RSI appears neutral at 55.19, but the MACD could see a bearish crossover.

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The Invesco QQQ Trust (NASDAQ: QQQ) rose 0.57% over the past week, making it the best performing major index. After breaking out from trendline resistance and its R1 resistance at $167.33, the index has been stock in a narrow price channel. Traders should watch for a breakout from upper trendline resistance to R2 resistance at $173.73 or a breakdown from R1 support to the 50-day moving average at $163.84. Looking at technical indicators, the RSI appears a bit lofty at 60.98, while the MACD could see a bearish crossover. (For more, see: 5 Tech Stock Winners From China Trade Truce.)

The iShares Russell 2000 Index ETF (ARCA: IWM) fell 0.39% over the past week. After breaking out from upper trendline resistance to fresh all-time highs earlier this month, the index gave up some ground this week amid profit taking. Traders should watch for a renewed push toward R2 resistance at $164.16 or a move lower to retest trendline support levels at around $160.00. Looking at technical indicators, the RSI appears a bit lofty at 64.83, but the MACD could see a near-term bearish crossover.

The Bottom Line

The major indexes were mixed over the past week, although most technical indicators suggest overbought conditions. Next week, traders will be keeping an eye on several upcoming economic events, including gross domestic product data on May 30, jobless claims on May 31 and employment data on June 1. The market will also be keeping a close eye on the evolving political situation in both Europe and the United States. (For more, see: 'Stealth' Economic Slowdown Is Bad News for Stocks.)

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