SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. The S&P500 broke new barriers last week after a tech stock rally fueled markets to all time highs. The spark that lit off the move was the strong quarterly earnings from Taiwan Semiconductor Manufacturing Company (See earnings blog post from January 18th on our website). The semiconductor giant beat analysts’ expectations and helped boost other mega large chip manufacturers such as Nvidia and AMD to new all time highs. More earnings are expected this week from key companies such as Netflix, Tesla, and IBM. Investors will be watching closely for the 2024 outlook these companies post because they’ll provide more clarity on what to expect in the quarters ahead. 

On the economic front, last week there were multiple Fed members who spoke and remained adamant about their outlook on interest rate cuts. The foundation of the market rally since last year has been investor hopes on rate cuts in 2024, but members of The Fed stated that they’ll rely on developing data to make any adjustments. There are a few pieces of important data this week, the most notable being U.S. GDP data (Prelim) and the PCE Index. The PCE Index in specific is key to gauging inflation data. December’s CPI report showed inflation ticked up, but the PCE Index is more closely watched by The Fed so its results have direct impact on the likelihood of interest rate cuts. 

Technical analysis:

SPY is now at all time highs so there are no barriers in its way. Friday’s rally broke strongly above the 480.00 resistance, but it didn’t retest the breakout level to “reinforce” the breakout. The best possible outcome is a retest of 475.00-480.00 this week then a reversal for more upside, but the retest is not guaranteed to happen. Buyers will likely remain very optimistic above 480.00 and could want to see 498.00-500.00 before taking some profits.