Weekly Stock Market Update & SPY Technical Analysis
The stock market Fear & Greed index is sinking closer to the “extreme fear” side as geopolitical tensions escalate. The ongoing conflict between the United States and Iran led to a historical spike in oil prices last week, if sustained at these prices, the economic impact could be detrimental.
Why does oil matter so much?
Without a consistent and predictable oil supply, fuel prices jump. Not just fuel for people to get to work, but fuel for planes, ships, cargo trucks…etc. This leads to inflation across the economy. With prices of goods and services already trending higher due to tariffs, this added layer of uncertainty holds a lot of weight. As oil prices spiked last week, the Volatility Index (VIX) moved to its highest level in 10 months.
The U.S. Strategic Petroleum Reserve (SPR):
The SPR is currently sitting near 40 year lows, which leaves the odds of tapping into it low. Following the Russian invasion of Ukraine, President Biden tapped into the reserve to stabilize global oil prices, but it hasn’t been filled back up yet. President Trump vowed to fill it to “the top,” on his campaign trail, which lowers the chances of him tapping into it now that the U.S. needs it desperately to control fuel prices and not let inflation spiral.
Economic calendar this week:
- Consumer Price Index (Wed) - key inflation report
- U.S. Trade Deficit (Thu)
- Q4 GDP - first revision (Fri)
- Personal Income (Fri)
- PCE (Fri) - another key inflation report
- Job Openings (Fri)
- March Consumer Sentiment (Fri)
As you can see, this week is full of important economic data. These reports and new developments from the Middle East are going to the main subjects of headlines throughout the week. What’s important is extracting the data that matters from these reports and shutting out the noise that the media sells. Numbers matter most.
We’ll be covering each report in our daily morning updates. See more here.
SPY Technical Analysis:
Over the last week, SPY moved below its 100 day moving average (not shown on the chart above). This line has acted as support since early April of last year, and now that SPY is below it, it leaves the index vulnerable to a further correction. The biggest area of support coming into this week is 669.00-670.00, a move below is likely to take SPY down to retest its 200 DMA around 656.00-664.00.
Note that the market is being headline driven right now, which naturally increases volatility. Keep an eye on the volatility index this week and try to avoid high IV options if trading options. Higher premiums make for a tricky environment On the stock side, lots of names are coming down to more attractive valuations, but we’re still being very selective in our holdings to maintain a strong P/L ratio.
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.