Weekly Stock Market Update & SPY Technical Analysis
Markets experienced their highest level of volatility in years last week after fears of a recession resurfaced. Although volatility eased as the week progressed, nerves remain high about what could happen this week. The focus now turns to inflation data, which will be critical to watch. With recession fears on the rise, markets are hoping the Fed steps in and follows through on its September rate cuts. However, that won't be possible if inflation exceeds expectations. The Consumer Price Index (CPI), which measures inflation, is expected to reflect a reading of 3% year over year, unchanged from last month's reading but still on the right track of gradual improvement.
The retail sector will also be under scrutiny this week. Investors are anticipating earnings from big-box retailers such as Walmart and Home Depot, while also awaiting key U.S. Retail Sales figures. Retail performance is important to monitor because it reflects consumer behavior and spending patterns. Friday's Consumer Sentiment report will provide further insight into the current mindset of U.S. consumers.
SPY Technical Analysis:
The biggest question this week is whether last week's bounce was a fluke. SPY's lows from the "flash crash" were around 507.83, making that the most critical support level going into this week. We may swing back towards it, but as long as buyers defend it, there's still a chance that SPY will build a base at this range to push higher in the weeks to come. We have resistance at 537.50, with the next significant resistance level around 555.00.