SPDR S&P 500 ETF Trust (SPY) News and Forecast: Is this dip or don't?

Flatline Friday was uneventful but not that unexpected given the volatile week the market experienced. Monday and Tuesday saw a continuation of the previous week's steep losses, but the Fed did manage to steady the ship yet again. It is getting pretty good at that, and once again the tonic was the lack of information regarding any tapering of its massive bond stimulus program. Markets took that as the cue they need to recover for the remainder of the week. Friday's price action was not exactly reassuring if you are of the bullish persuasion and we reach a critical juncture. 

SPY stock news

We have pointed out previously that this dip was different from any other so far this year in that it was a deeper dip than the previous ones. That signals a downtrend, but factors may be conspiring just to frustrate the crowd. After all, that is what the market is all about – frustrating the many so the few can profit. The statistics speak for themselves. The vast majority of traders lose money. Buying the dip has been the only show in town since March 2020.

The big beasts of the S&P 500 though have the potential to reestablish bullish arguments. Apple has the new iPhone, and early preorder data from Asia and China looks like we could be entering a supercycle, see here. Tesla rallied strongly on Friday, ending up nearly 3% on Elon Musk's comments that the chip shortages are short-term and unlikely to last into deep 2022. Between them, that is 8% of the index. As our chart below shows, where Apple goes, the market generally follows and sometimes vice versa.

Apple v SPX last four years

SPY stock forecast

Friday's move has retraced the SPY to just above the 9-day moving average, and the damage for the week is not as bad as initially feared. However, we remain bearish in our view unless $448.92 is broken. That level is last week's high. This late bounce to us looks like an opportunity to short. If you do, please use stops, always with the stops!