SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. The S&P500 closed above 5000 for the first time ever on Friday as buyers continued pouring into the market. Stellar earnings from large cap technology companies and forecasts of a rate cut have been the fuel for this rally, but this week will be a big test of how soon an interest rate cut could come. Last week we heard several Fed members speak and the theme was that they will continue to rely on economic data to implement a rate cut. We’ll be seeing some of that key economic data this week with the CPI and PPI reports, which have been critical in measuring inflation. December’s inflation reading reflected a uptick from 3.1% to 3.4%, so all eyes will be on January’s results. With The Fed’s FOMC meeting quickly approaching next month, markets want to see the CPI report come closer the 2% target The Fed have. Also on the calendar this week is retail sales data. Retail sales directly reflect consumer behavior and will likely affect stocks like Walmart, Target, GAP, Macy’s…etc. Many retail names have lagged the market rally so this might be a catalyst that drives them lower or higher ahead of their earnings later this month. 

Technical analysis:

SPY reached another all time high last week on strong volume and relative strength. We expect this rally to continue for now, but would like to see capital move into other sectors of the market. If this is truly the birth of a new bull market then other parts of the market will need to help do some lifting with tech stocks to sustain it.

Coming into this week our main SPY resistance in focus is 501.65. There are no previous resistance points historically so it is tough to say where SPY will stop above that level, but based on volume and overall market momentum, it will likely make its way to 515.00-520.00 by March.