Stock Market Faces Technical Hurdles Shown on Weekly Charts

NEW YORK (TheStreet) -- April ended with mixed performances from the stock market's five major averages.

The Dow Jones Industrial Average closed Thursday at 17,841. That was 73 points less than its key weekly moving average of 17,914. A close Friday at less than 17,914 will result in a negative weekly chart. The index opened higher Friday and was at 17,950 shortly after 10 a.m. EDT.

The S&P 500 at Thursday's closing level of 2085.5 was less than a point lower than its key weekly moving average of 2086.4, so a higher close Friday will keep this chart neutral. A close below last week's low of 2084.11 will be a negative weekly key reversal after this index set an all-time intraday high of 2125.9 on Monday. The S&P 500 was at 2095.7 shortly after 10 a.m. EDT Friday.

The Nasdaq Composite at Thursday's closing level of 4941 was just 8 points lower than its key weekly moving average of 4949, and its momentum reading of 80.05 was just above the overbought threshold of 80.00. A close below last week's low of 4952 would be a negative weekly key reversal after this index set a multiyear intraday high of 5119 on Monday. This is less than the all-time high of 5,132 set in March 2000. The index was at 4973.8 shortly after 10 a.m. EDT Friday.

The Dow Jones Transportation Average at Thursday's closing level of 8593 was 232 points below its key weekly moving average of 8825, so this weekly chart is negative after setting an all-time high of 9310 back on Nov. 28. This economically sensitive index is also below its 200-day simple moving average of 8711. The index was at 8656.7 shortly after 10 a.m. EDT Friday.

The Russell 2000 at Thursday's closing level of 1220.13 was 27.24 points below its key weekly moving average of 1247.27, but its momentum reading of 81.36 is above the overbought threshold of 80.00. The index was 1224.3 shortly after 10 a.m. EDT Friday.

Here are weekly charts for three exchange-traded funds that track major equity indices.

Courtesy of MetaStock Xenith

The SPDR Dow Jones Industrial Average ETF (DIA) had a close of $178.18 on Thursday, and the ETF was just above its key weekly moving average of $178.74 with momentum projected to be 67.24, down from 70.43 last week. The 200-week simple moving average of $147.47 is the longer-term "reversion to the mean."

Investors looking to buy this ETF should place a good-till-canceled limit order to buy if the ETF drops to $150.82 and $145.24, which are key levels on technical charts until the end of the year.

Investors looking to book profits should place a good-till-canceled limit order to sell the ETF if it rises to $185.42, which is a key level on technical charts until the end of May.

Key levels on technical charts of $179.33 and $182.31 should remain as magnets until the end of June.

Courtesy of MetaStock Xenith

The SPDR S&P 500 ETF (SPY) had a close of $208.46 on Thursday, and the ETF was just below its key weekly moving average of $208.50 with momentum projected to be 73.33, down from 73.66 last week. The 200-week simple moving average of $163.52 is the longer-term "reversion to the mean."

Investors looking to buy the S&P 500 ETF should place a good-till-canceled limit order to purchase the ETF if it drops to $158.47 and $155.56, which are key levels on technical charts until the end of the year.

Investors looking to book profits should place a good-till-canceled limit order to sell the ETF if it rises to $214.71, which is a key level on technical charts until the end of May.

Key levels on technical charts of $205.08 and $207.13 should remain as magnets until the end of June.

Courtesy of MetaStock Xenith

The PowerShares QQQ Trust ETF (QQQ), which tracks the Nasdaq, had a close of $107.63 on Thursday, and the ETF was above its key weekly moving average of $107.19, with momentum projected to be 74.35, down from 74.46 last week. The 200-week simple moving average of $77.31 is the longer-term "reversion to the mean."

Investors looking to buy the PowerShares QQQ ETF should place a good-till-canceled limit order to purchase the ETF if it drops to $89.24, which is a key level on technical charts until the end of the year.

Investors looking to book profits should place a good-till-canceled limit order to sell the ETF if it rises to $111.63, which is a key level on technical charts until the end of May.

A key level on technical charts of $105.64 should remain as a magnet until the end of June.

Investors not familiar with technical analysis should begin with the notion that a price chart for an index or stock shows a road map of past price performance, which provides guidance for predicting future share price direction.

Here's how to read a weekly chart. This chart shows weekly price bars going back to the beginning of 2007 and thus includes the crash of 2008, then the current bull market for stocks that began in March 2009. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading of less than 20.00 is oversold and a reading of more than 80.00 is overbought.

A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising to more than 20.00.

A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining to less than 80.00.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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