SPDR S&P 500 ETF Trust (SPY) News and Forecast: Is the SPY going lower?
- SPY continues to trade in a holding pattern ahead of Thursday's inflation data.
- Yields rose further on Tuesday, but equities remained in positive territory.
- Volatility drops after a wild week of big tech earnings last week.
Equity markets remain on hold ahead of the big data release on Thursday. We had spoken earlier in the week of the risk-reward for this inflation release being skewed to a potential upside for equities based on a surprising low inflation number. The upside is all but priced in now.
SPY Stock News
There was nothing too surprising in yesterday's moves. The relief rally or stabilization is just holding in place, but really it is a case of position closing and risk aversion before the US CPI on Thursday. Big tech earnings are finished, and this week's earnings slate does not have the power to dictate the indices' moves.
We are left in something of a stalemate. Geopolitical events and news flow appear to have stabilized also. Germany did provide some modest comfort to equity markets as it backed sanctions on the Nordstream 2 pipeline should Russia invade Ukraine.
SPY Stock Forecast
The S&P 500 (SPY) remains caught between the 200 and 100-day moving averages. The bigger levels are $428 and $458. These are the key short-term pivots. The relative calm in the main indices this week has seen a decent jump in some breadth indicators. The number of stocks above their 50-day moving average jumped nearly 16% yesterday, while the number of stocks above their 100-day moving average jumped 10% on Tuesday. Both are, however, in downtrends. VIX and bond market volatility also continues to fall from last week's elevated levels.
SPY daily chart
Wednesday is set up for another range-bound session. Risk is declining ahead of the CPI tomorrow. The hourly chart below shows the intraday levels to keep an eye on. $458 as mentioned is key, but any test is likely to fail or be short-lived given its significance.
$450 is the value zone this week and the safe zone. We favour fading moves toward the top of the range at $458 for a retracement back to $450. Testing lower, $444 is support, and a break will then test last week's volatile range from $424 to $444. Again, $428 is unlikely to see a sustained break before Thursday.
SPY hourly chart
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
