SPY Technical Analysis & Weekly Stock Market Update


Chart done on hourly timeframe. Markets wrapped up a volatile August last week and started September with very little trading volume on Friday. Trading tensions were high through the week as mixed economic data poured in and left many questioning the new developments about inflation and the job market. The PCE report showed a YoY increase of 3.3% in inflation, higher than the previous month’s reading at 3%. The Fed’s target inflation reading is 2%, so an increase can result in further and lingering rate hikes. This week, The Fed’s Beige Book will be released and it is expected to detail the current health of the economy according to local and regional leaders. This book is released two weeks ahead of the FOMC meeting to help members decide on monetary policy changes. 

In the labor markets, although non-farm payrolls grew, the unemployment rate ticked higher to 3.8%. This is the highest reading since February 2022, but surprisingly, markets seemed to celebrate the results. Higher unemployment could translate to less spending, and The Fed were clear that jobs will be lost as interest rates take their toll; so this was already in the forecasts. 

Technical analysis:

Despite all the economic uncertainty, buyers managed to hold last week’s highs after the rally that took place on 8/29. Friday’s highs attempted to breach a breakout, but got rejected at 453.70, making that the first resistance in focus coming into this week. Buyers need a breakout above that level to move to the next price target of 459.00-460.00. To the downside, the primary support in focus is 448.30, a breakout below that can force a sharp drop to 445.00-445.40, and even lower if selling volume is strong.