Weekly Market Update & SPY Technical Analysis

Weekly Stock Market Update & SPY Technical Analysis 

Markets ended sharply lower last week after one of Wall Street’s most prominent CEOs warned of a possible slowdown in the U.S. economy, pointing specifically to rising geopolitical tensions and inflation as being the reason. Jamie Dimon, the CEO of JP Morgan, spoke on Friday after the financial institution reported its quarterly earnings and sent fears across markets with his unsettling comments. His comments came during the same week of CPI, which showed a month over month uptick in inflation from 3.2% to 3.5% largely because of rising energy prices. Energy has been on a rampage as demand heats up to fuel multiple wars around the globe and as OPEC+ leaders change production levels.  Core inflation, which excludes energy and food prices, stayed the same month over month, but rising costs of fuel have historically lead to higher prices in other parts of the market so the longer energy is inflated, the more damage it can do to prices. Last week’s Fed’s Minutes Report still showed that many members are still on board with a rate cut this year, but that’s coming into question with the newly developed inflation data and global tensions. 

Uncertainty is the kryptonite of the stock market and unfortunately there isn’t much that’s helping reinforce confidence right now, but we are heading into earnings season, which could turn the tides. Other than interest rates, company financial performance is another main catalyst for market movement. JP Morgan and other financial institutions kicked off earnings on Friday and although they sold off, their numbers were still impressive. Companies in various sectors will report this week and help shine a light on the quarter’s results, the most prominent names to watch for are UnitedHealth Group, Taiwan Semiconductor, and Netflix.  Apart from earnings, markets are expecting Retail Sales Data this week, which is expected to ease in March. This report will especially impact stocks in the consumer retail sector, but should be watched closely because consumer’s are at the forefront of our economy and their behavior can give us an idea of how they’re approaching spending. 

SPY Technical Analysis:

Friday’s sell-off forced SPY to revisit its 50 day MA on the daily chart (Not shown above), which is a level not seen since November 2023. The line is a pivotal one and will be watched closely this week. Buyers need to defend it to avoid a further break below 507.70 and 503.00. Selling pressure could increase below those levels and force fill the gap down towards 493.00-498.00. To the upside, the first resistance in focus will be 515.45, a move above that has a price target of 521.00-526.00.