Weekly Stock Market Update & SPY Technical Analysis
It’s been a quiet month for the market so far, but this week may bring on some fireworks as The Federal Reserve decides on interest rates. Probabilities of another interest rate cut this year have been violently swinging back and forth for weeks, and after a series of new economic data, odds of a rate cut are sitting at 86.2% at this time of this writing. The Fed doesn’t usually like to “surprise” investors so the chances are they’ll follow through with a quarter point cut as widely expected.
What does this mean for us?
Understanding the WHY behind the rate cut is crucial. The move to swiftly cut rates stems from weakness in the labor market. The unemployment rate has slowly ticked up as hiring slows and layoffs mount, so The Fed is moving to promote growth and hiring by lowering rates. This can be interpreted negatively by investors.
While rate cuts are good for the economy, if they’re seen as an “emergency” lever, investors may get spooked. What will matter is how Fed Chair Jerome Powell sounds on his press conference following the decision. If he highlights weakness in the economy and whispers “recession” fears, then it could send some shockwaves to the market, especially at record highs.
The market has a way of surprising us so we won’t take new record highs fully off our radar, but a cautious approach is a smart one. Seems like a lot of the good news may be priced in, let’s see how it turns out. We’ll be adjusting our exposure as necessary.
SPY Technical Analysis:
The all time high at 689.88 is the only resistance between the market and a “blue sky” breakout. The big question on everyone’s mind is whether or not the S&P 500 can achieve 7,000 before year end (700 on SPY). We’re already in a SPY CALL position that’s far dated. Our outlook remains bullish in the long term, but cautious in the near term.
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.
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