SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. Nerves are high going into this week as markets second FOMC of the year. The highly anticipated meeting will update investors on where The Fed stand on fiscal and monetary policy, but the main focus will be on interest rates. Probabilities of a March rate cut at the start of 2024 were around 80%, but now that number has fallen to below 10%. Members of The Federal Reserve have made it clear that they want to see inflation closer to 2% before cutting interest rates. The last CPI report reflected an uptick in inflation to 3.2%, away from The Fed’s target and the likely reason why odds of a rate cut are so low. 

Jitters have already started ahead of the meeting, forcing large cap tech names such as Apple, Nvidia, Tesla, AMD to pull back and for QQQ, the largest technology index, to break its 20 day moving average. This could spell further trouble for tech in the week ahead, but it may move capital to other sides of the market. While technology companies have pulled back, other sectors like precious metals, materials, and energy have started to gain traction. Capital rotation is a healthy sign of a bull market because it helps balance the foundation of a rally. Technology stocks alone can’t sustain a bull market rally so if other sectors begin to gain market cap, then markets will restore balance. 

Technical analysis:

SPY ended Thursday and Friday with notably strong volume, and move below its 10 MA (Daily time frame). Probabilities are high that we see the choppy environment continue until Jerome Powell speaks so keep that in mind when positioning. As of now both sides are fighting for control, bulls can regain it above 512.50, and bears can gain it below 504.40.