SPDR S&P 500 ETF Trust SPY Stock News and Forecast: Rally long overdue, but will it last?

The main stock indices in the US ended Monday sharply lower as hopes for a quick end to the conflict of a resolution from Russia-Ukraine peace talks evaporated. Oil prices continued to surge as the US pushed Europe for a ban on Russian energy imports. The SPY closed Monday down a stark 2.95%, while the Nasdaq took an even greater hit closing just under 4% lower. 

SPY News

So far things on Tuesday are looking slightly more positive. The EU is reportedly working on plans for joint debt issuance to fund a stimulus plan to combat the effects of sanctions. This is seen as a significant step and a huge positive for the euro, which is up strongly versus the dollar this morning at 1.0905 now. Joint European debt issuance has long been a stumbling block to complete financial integration of the block and was a noted stumbling block during the Great Financial Crisis in 2008. Back then peripheral bond yields soared as the EU did not share a collective debt burden. Any plans for collective debt issuance were resisted by the EU's richer countries, which helped to undermine confidence in the whole euro currency project. 

This morning some comments from Russia on requirements to end the conflict emerged that are reportedly not as tough as previous terms, so perhaps some negotiation may eventually become possible to end the conflict. This has also helped risk assets, and European indices are higher this morning with the Eurostoxx up nearly 3% at the time of writing. 

SPY Forecast

We identified yesterday and last week the key support and resistance channels of $438 and $428. Failing at $438 late last week set up Monday's test of $428, and the SPY cracked it early. 

SPY chart, daily

From the 15-minute chart below, we can see the early test higher before a sharp wave of selling pressure hit. $428 cracked and was restarted perfectly before that second failure saw accelerated selling. Yesterday we said,  "With a break of $428 will come a likely sharp move to $420." That is exactly what we got with the SPY closing at $419.43. Today we should see a higher open, but it is unlikely that $428 will be broken. This is the key intraday resistance now. Holding above $423 though should stabilize the SPY and perhaps set up a test of $428 late in the session. If $428 is broken, look for a stall around $430 as volume is high at that level. 

SPY chart, 15-minute