SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. Markets roared higher last week despite Fed President Jerome Powell’s hawkish comments in regard to fiscal policy. Prior to his speech, markets were on track to book their longest winning streak in two years, but the speech caused a sharp drawdown that was quickly bought the next day. The sharp and intense buying exemplified just how powerful buying momentum is right now, and it could signal what’s to come next week, but there will be multiple major tests. The first and most important will be the consumer price index (CPI) report, which will give an update on inflation levels for October. Later in the week we will see the producers price index (PPI) report, this report is specific to producer inflation from the manufacturer’s side. The CPI report has significantly improved from its 2022 highs of 9.1%, but has shown an uptick from 3.0% to 3.7% in recent months, away from The Fed’s 2% target. It is imperative that this report comes inline, or below, expectations to avoid a shock to the market. High inflation could signal more rate hikes and the likely chance that current high rates will linger on. Next week will also be centered around retail sales and retail earnings. The Census Bureau is expected to release the October national sales report, and big box retailers such as Home Depot, Target, Walmart…etc will be reporting Q3 numbers. Last but not least, Friday marks the final day of extension to avoid the government shutdown, lawmakers will need to find a solution or else political uncertainty can bleed into the market. 

Technical analysis:

SPY’s ability to close above 438.60 on Friday is very significant. This was the level buyers needed to regain in order to potentially set a new, higher high, on the macro-charts. Now buyers will need to defend that level for the markets to continue their rally. Many names, especially in tech, are indicating strong bullish signals on their technicals, which leads us to believe that the rally is just getting started. Our projections for the week will be modest and updated depending on the CPI report, but the preliminary target for SPY is 444.00-445.00.