SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. Markets are getting ready to take on a new month after September once again proved to be a very volatile month. The volatility index (VIX) reached a high not seen since May, and SPY closed below 430.00 for the first time since June. This volatility is expected to continue this week as traders face a new uncertainty about the government shutdown. Analysts at Goldman Sachs are estimating that a government shutdown could cost the U.S. 0.2% in GDP growth per week that it is shutdown, plus major reporting agencies like the BEA would no longer report key economic data. The Fed rely on the BEA and BLS to make important monetary policy decisions, so without these reports, The Fed may go into their next FOMC on October 31st without clear economic data. 

Outside of the uncertainty around the government shutdown, markets are also preparing for September’s labor market reports. ADP is expected to release its monthly National Employment Report for September on Wednesday, and the nonfarm payroll report is expected Friday. The U.S. unemployment rate climbed to 3.8% in August, up from 3.5% the month before, but still at a historic low. Markets are expecting the unemployment rate to stay around the 3.8% mark. 

Technical analysis:

Since markets just closed out a full month, it’s important to zoom out and look at the monthly timeframe and see where the candle closed. September 2023’s candle is the first candle to close below its previous month since last September in 2022. Following the 2022 decline, it took two months for markets to regain the full move back up and eventually SPY continued to climb to the high we saw recently around 460.00. Another thing to note about the monthly candle is that despite the downside action, it still closed above its 10/20 day MA lines, meaning the bulls are still controlling the monthly price action. Zooming in a bit closed to the daily chart, SPY’s candle on Friday opened just below the 10 day MA and sold off from that resistance, making that the key MA to watch going into this week. Buyers want to see a move above it for SPY to climb back towards 438.00. Critical support is 422.29, below that SPY’s downside PT is 416.00-417.00.