SPDR S&P 500 ETF Trust (SPY) Forecast: Equities rally in reponse to record low Michigan sentiment reading
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get Premium without limits for only $9.99 for the first month
Access all our articles, insights, and analysts.
UNLOCK OFFER- S&P 500 (SPY) gained on Friday as relief rally was sparked by falling bond yields.
- Rising recession fears fueled bond yield collapse.
- Nasdaq is the outperformer due to interest rate-sensitive growth stocks.
The equity market recovery gathered pace on Friday as a terrible reading from the University of Michigan field concerns over an imminent recession. All major indices closed higher on Friday: Dow Jones +2.68%, S&P 500 +3.06%, Nasdaq +3.49%. Energy stocks continued their recent underperformance as the ELX Energy sector was the worst performer. A global recession would naturally see oil prices fall as demand destruction sets in. This has set up the curious phenomenon we mentioned last month, whereby energy stocks are falling despite oil prices remaining high. The stock market tends to look forward by six months to one year, while oil prices reflect a more immediate time horizon.
S&P 500 (SPY) ETF news
The bullishness was everywhere on Friday. The put/call ratio fell to its lowest level since early April, while the number of stocks advancing hit nearly 85% across the entire NYSE.
Put/call ratio, daily
Percent of upside stocks, NYSE, daily
Falling yields have been the big driver of the recent rally, and after the terrible University of Michigan reading, investors are now penciling in lower rates and a peak in the hiking cycle in early 2023 before rate cuts come back into play. So sad news is good news then!
US 2-year yields, daily
Bond market volatility remains high. The MOVE index has come down, but bond investors are still struggling with direction from the Fed.
MOVE, daily
Commodity prices are also signaling a recession – look at copper go!
Copper futures, front month, daily
Copper is used as a global GDP barometer as its use is so widespread.
SPY ETF forecast: Mind the gap
The first gap is filled. Now can we get the next one done? Resistance then from $396 up to $401 will see the next gap filled. That should happen soon with the end of H1 and with indices rebalancing this Friday. It looks like equity inflows should be the dominant factor. $415, the fail from the previous bear rally, would then be the next resistance and likely a failure.
SPY chart, daily
Like this article? Help us with some feedback by answering this survey:
- S&P 500 (SPY) gained on Friday as relief rally was sparked by falling bond yields.
- Rising recession fears fueled bond yield collapse.
- Nasdaq is the outperformer due to interest rate-sensitive growth stocks.
The equity market recovery gathered pace on Friday as a terrible reading from the University of Michigan field concerns over an imminent recession. All major indices closed higher on Friday: Dow Jones +2.68%, S&P 500 +3.06%, Nasdaq +3.49%. Energy stocks continued their recent underperformance as the ELX Energy sector was the worst performer. A global recession would naturally see oil prices fall as demand destruction sets in. This has set up the curious phenomenon we mentioned last month, whereby energy stocks are falling despite oil prices remaining high. The stock market tends to look forward by six months to one year, while oil prices reflect a more immediate time horizon.
S&P 500 (SPY) ETF news
The bullishness was everywhere on Friday. The put/call ratio fell to its lowest level since early April, while the number of stocks advancing hit nearly 85% across the entire NYSE.
Put/call ratio, daily
Percent of upside stocks, NYSE, daily
Falling yields have been the big driver of the recent rally, and after the terrible University of Michigan reading, investors are now penciling in lower rates and a peak in the hiking cycle in early 2023 before rate cuts come back into play. So sad news is good news then!
US 2-year yields, daily
Bond market volatility remains high. The MOVE index has come down, but bond investors are still struggling with direction from the Fed.
MOVE, daily
Commodity prices are also signaling a recession – look at copper go!
Copper futures, front month, daily
Copper is used as a global GDP barometer as its use is so widespread.
SPY ETF forecast: Mind the gap
The first gap is filled. Now can we get the next one done? Resistance then from $396 up to $401 will see the next gap filled. That should happen soon with the end of H1 and with indices rebalancing this Friday. It looks like equity inflows should be the dominant factor. $415, the fail from the previous bear rally, would then be the next resistance and likely a failure.
SPY chart, daily
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.