SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. Next week is a pivotal week for markets as traders and investors prepare for major earnings, monetary policy updates, and labor market data. Last week’s market sell-off brought the S&P closer to correction territory, despite the fact that many large cap tech companies beat earnings expectations. This week’s earnings focus will on Apple, AMD, McDonald’s, AirBnb, and a few other notable names, but Apple’s earnings are especially in focus since it is the most valuable public company, and an earnings miss could be detrimental. 

The Federal Reserve will meet this week for their two day FOMC event and will decide whether to raise interest rates or keep them as is. The Feds hiked interest rates for 11 straight meetings since last year, but decided to hold them steady during their last meeting, markets expect them to do the same again this meeting. Fed members all agree that inflation is still too high and are adamant to keep the rates as is till inflation cools to their 2% target. This impacts stocks because higher interest rates make it more expensive to borrow capital, hurting company growth, research and development, hiring and consumer spending. 

Last but not least, labor market data for September and October is set to be released this week starting with the JOLTS report on Wednesday and ending with the non-farm payrolls report on Friday. The U.S. labor market has been resilient during the higher interest rate cycle, which has been seen as both a good and a bad thing. On one hand it is good for the economy that unemployment has remained at a historic low, but bad for inflation since most Americans have jobs and income to spend. 

Technical analysis

SPY (S&P 500) is on the verge of correction territory and below its most critical 200 day moving average. Selling volume has significantly outweighed buying volume in the last two weeks, suggesting that sellers could remain in control going into November. Considering this week is filled with major events, both sides may take a break and move markets sideways before another major push or drawdown in the weeks that follow. Anytime there are major reports, markets have a tendency to stay flat until the uncertainty passes so keep that in mind when positioning. The main support for SPY coming into this week is 409.00, a break below can send it lower to 403.00 and will likely bring most names down with it. Buyers are far from taking control as they would need to move it above 424.80 to regain any kind of trend.