SPY Technical Analysis & Weekly Stock Market Update (Sep 24th)


Chart done on hourly timeframe. Last week was an eventful week that brought many reputable stocks down to levels not seen in months. There was already uncertainty in markets from earnings and economic slowdowns, but The Fed’s FOMC meeting was the spark that set-off a steep multi-day sell-off. Although The Fed didn’t raise rates, they reaffirmed their willingness to hike rates even higher in 2024 as needed to battle the lingering inflation. The CPI report has shown a month over month increase in inflation over the last three months, and this week we will receive the PCE report, which is The Fed’s preferred inflation gauge. Markets desperately want to see improvement on the PCE index in order to alleviate the mounting pressure, but unfortunately forecasts show a rise in PCE due to a sharp increase in energy prices.

Apart from an update on inflation, markets will receive the final GDP reading for the second quarter of 2023. Preliminary readings showed an increase of 2.1%, which marks the fourth quarter in a row of growth in the U.S. Consumer spending has been moderately positive in 2023, which has contributed to the modest GDP growth, but it has also contributed to inflation, making it a double edged sword. 

Technical analysis:

September’s three largest volume days (9/15, 9/21, 9/22) have been strongly red days, controlled by sellers. Last week, SPY broke below the 100 day moving average, which means it’s currently trading at a price below the average price buyers have been willing to pay over the last 100 days. This is a support not broken since March 2023, which explains the sharp increase in selling volume upon the break. Coming into this week, our support in focus is 430.00. Buyers managed to defend that level on Friday, but not with enough strength to suggest a reversal. Markets are far from regaining bullish confidence, there are multiple resistance points (see chart) to break below bulls take control again above 445.50.