Chart done on hourly timeframe. Markets are set to close out the final week of 2023 this week and many are wondering if it’ll bring forth a Santa Rally, furthering the push we’ve seen over the last eight weeks. Investors have been riding the bullish wave on hopes that inflation is easing and The Fed will slash interest rates in 2024. Last week’s PCE report reflected a 2.6% change from a year ago in November, which is the closest we’ve gotten to The Fed’s 2.0% inflation reading. Although this is great news, it wasn’t enough to send markets higher on Friday, likely due to a decline in volume ahead of the holiday weekend.
Since there aren’t many related economic reports set for this week, the focus will be on the technicals (charts). For SPY specifically, buyers will need to continue defending the 467.00 support to avoid a sharp sell-off back to 460.00. Since it is a shortened week, and since SPY nearly visited 467.00 last week, buyers don’t want SPY to move towards 467.00 at all. The best possible bullish outcome is an early week breakout above 476.30 for a move to all time highs.
Last week we saw sudden and sharp downside moves, accompanied by stronger selling volume than recent trading weeks. It is key to make note of these moves because they could be signaling a market reversal/pull back, hence why 467.00 is largely in focus going forward.