Weekly Stock Market Update & SPY Technical Analysis
Politics, economic data, and a new Fed chairman…each one of these points must be considered by traders and investors as we enter the last two weeks of June and deeper into the third quarter.
The Current Geopolitical Situation
You’re not alone in being completely unconvinced of any peace treaty between the U.S. and Iran, especially after recent reports of Israel increasing its attacks on Lebanon, threatening any sort of deal. Even President Trump is seemingly growing impatient with Israel’s Prime Minister Netanyahu’s fierce opposition.
Why does this matter to us? Apart from us being human beings and having empathy towards the wars around the world…this matters to us as traders and investors because it adds pressure on energy prices around the globe. Oil prices are already set to rise coming into this week, which means energy-driven inflation is expected to continue. This pushes back the narrative of any rate cut anytime soon. In fact, the most recent FOMC meeting reflected that nearly half of the Federal Reserve’s members favored interest rate HIKES before end of year to control inflation / prices. Let’s dig deeper…
The Federal Reserve and Kevin Warsh
New Fed Chairman Kevin Warsh conducted his very first FOMC press conference last week, and to everyone’s surprise, his tone was far more hawkish than expected. Markets were looking for a signal that he’d be cutting rates soon, but he made it clear that The Fed will continue to pursue its dual mandate of maximizing employment and controlling prices. Warsh also plans to:
- Pull back on forward guidance, meaning the Fed may stop giving markets such a clear roadmap on where rates are headed.
- Review the future of the dot plot, press conferences, meeting minutes, transcripts, and overall Fed communication strategy.
- Reevaluate how the Fed uses economic data, especially because many government data points still rely on old survey based methods that can be heavily revised later.
- Launch task forces around inflation, communications, economic data, productivity, employment, and potentially the Fed’s balance sheet (This has been one of the biggest points 🚨).
The biggest takeaway is that this is not the same Fed playbook we have grown used to. Under Powell, markets became extremely dependent on forward guidance, dot plots, and carefully managed expectations. Warsh seems to want a Fed that talks less, gives fewer hints, and forces markets to price economic data more independently.
The bull case is that Warsh is trying to make the Fed more disciplined and less reactive to market pressure. The risk is that a less transparent Fed could make every inflation report, jobs report, and FOMC meeting more volatile than usual. For now, this supports a more selective market approach: favor strong balance sheets, durable earnings, pricing power, and companies that can still grow even if rates stay higher for longer (Something we’ve been preparing for over the last few months already in our positioning / watchlist).
Weekly Watchlist
Economic Reports this week
- S&P flash U.S. services PMI (Tue)
- U.S. leading economic indicators (Wed)
- PCE Index / Q1 GDP / Personal Income / Initial Jobless Claims (Thu)
- Advanced U.S. Retail & Wholesale Inventories / Consumer Sentiment (Fri)
SPY Technical Analysis
While the general trend remains bullish, SPY did make “lower highs” last week, with bulls unable to regain the trend by breaking into a new record high. We’ll continue monitoring and updating the overnight trend in over daily morning updates, but we’re kicking off the week with a bearish overnight trend. The most critical support for SPY is around 737.00.
Interestingly enough, small and mid cap indexes like the Russell 2000 and Avantis US Small Cap (we’ve been buying this in our set-ups), both closed and defend their WoW uptrend, possibly signaling more strength in small / mid cap markets.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always conduct your own research or consult with a licensed financial advisor before making investment decisions.
Hyper Stocks and its contributors may hold positions in some of the securities or assets mentioned above. These positions are subject to change without notice. Any opinions expressed reflect current views at the time of writing and are not guarantees of future performance. Past performance does not guarantee future results.