ChartAdvisor for August 21 2015 Tickers in this article: SPY, DIA, QQQ, IWM Problems brewing overseas took a toll on domestic stocks this week, causing the U.S. markets to move sharply lower as of Thursday's close. Earlier in the week, the Conference Board's index of leading economic indicators fell 0.2% after a healthy 0.6% gain in both May and June, suggesting potential problems ahead. The July 2015 Federal Open Market Committee minutes also show the Federal Reserve was prepared to raise rates in September. However, this month's lackluster economic performance may cause delays.
International markets also moved lower over the past week as of Thursday's close. Japan's Nikkei 225 Stock Average fell 2.69%, Germany's DAX 30 fell 5.03%, and Britain's FTSE 100 fell 2.95%. In Europe, Greece's third bailout was officially approved, although harsher rules were adopted for handling other countries that may require bailouts in the future. In Asia, China's surprise currency devaluation and Japan's equally surprising drop in gross domestic produce (GDP) sent shares lower.
The S&P 500 SPDR (SPY) 
The SPDR S&P 500 ETF (ARCA: SPY) fell 2.6% over the past week, as of Thursday's close. After a brief rally last week, the index moved sharply below its lower trend line and S1 support at $205.35 to its July lows. Traders will watch for a rebound from these levels back toward the S1 support or a continued move lower to the S2 support at $200.19. Looking at technical indicators, the relative strength index (RSI) appears oversold at 34.97, while the moving average convergence divergence (MACD) experienced a bearish crossover. Dow Jones Industrial Average SPDR (DIA)  The SPDR Dow Jones Industrial Average ETF (ARCA: DIA) fell 2.68% over the past week, as of Thursday's close. After trading near its lower trend line for some time, the index fell sharply lower near its S2 support at $169.87. Traders should watch for a rebound to the S1 support at $173.27 or a move lower to make new lows. Looking at technical indicators, the RSI appears to be oversold at 31.38, while the MACD has continued its downward trend with a new bearish crossover.
PowerShares QQQ Trust (QQQ) 
The PowerShares QQQ Trust (NASDAQ: QQQ) fell 3.1% over the past week, as of Thursday's close. After breaking down from its 50-day moving average at $110.09, the index fell to its lower trend line and S1 support at $107.06. Traders should watch for a rebound back toward its 50-day moving average or an extended move lower to its S2 support at $102.16 in the bear case. Looking at technical indicators, the RSI appears oversold at 34.97, while the MACD remains in a bearish downtrend.
iShares Russell 2000 Index ETF (IWM)  The iShares Russell 2000 ETF (ARCA: IWM) fell 3.29% over the past week, as of Thursday's close. After trading near its trend line support, the index broke down sharply below its S1 support at $119.29. Traders should watch for a rebound back to its trend line support turned resistance or a move down to its S2 support at $115.61. Looking at technical indicators, the RSI appears oversold at 30.99, while the MACD continues to be in a downtrend dating back to mid-July.
The Bottom Line The major indexes moved sharply lower over the past week, as of Thursday's close, although many RSI readings suggest they are oversold. Next week, traders will be watching a number of economic indicators, including new home sales on August 25, durable goods on August 26, GDP and jobless claims on August 27 and personal income and outlays on August 28. Of course, Federal Reserve speculation and overseas issues could also influence prices.
Refine Your Financial Vocabulary Sign up to receive our FREE Term of the Day newsletter. Gain a better understanding all things financial with technical and easy-to-understand explanations. Click here to begin developing your financial language with this daily newsletter. Charts courtesy of stockcharts.com Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.
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