SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. Markets continued their pull back last week after mixed inflation data from the CPI and PPI reports. Prices of goods and services saw an uptick in July as CPI data showed a 3.2% year over year reading compared to June’s 3.0%. The jump may be small, but it moves inflation further away from The Fed’s target of 2%; which means more rate hikes could be due. The Federal Reserve will release their Minutes report this week, which will breakdown their last FOMC meeting and give investors a further insight on Fed members’ outlook on monetary policy. Although The Minutes report doesn’t really expose new information, it still makes markets nervous so be on the lookout for it this Wednesday. Last week, the University of Michigan released August’s preliminary Consumer Sentiment Index numbers, and although consumer sentiment declined slightly to 71.2 from 71.6 month over month, it still is strongly healthy compared to the year over year number of 58.2. Generally speaking, consumer are still spending strongly, but we’ll find out more this week’s retail data. July’s retail spending report is expected to be released along with big box retailer earnings from notable names like Walmart, Target, and Home Depot. Retail activity is at the frontline of the economy so these reports will all be highly important to watch in order to gain insight on consumer spending. 

Technical analysis:

SPY’s daily chart (not shown above) has pulled back to the 50 day moving average for the first time since April-May. During the last retest at this level, buyers were successful at defending the support and reversed markets into new 2023 highs. Although selling activity sharply increased last week, VIX (The volatility index), ended up losing steam on Thursday and Friday, potentially indicating that the selling may be coming to an end. It is critical this week for buyers to defend the 50 day MA as well as the 442.20 support to avoid a further sell-off to the next support around 436.40-437.00. The bullish pivot point is 451.70, buyers need to reclaim that level to regain bullish confidence in the market.