SPDR S&P 500 ETF Trust (SPY) News and Forecast: $398 is the intraday pivot

  • SPY remains in the red on Tuesday despite attempts at a higher opening. 
  • Positive economic data leads to more losses.
  • Higher bond yields hit stock valuations as Nasdaq was worst performer.

Another day another round of losses as the tide continues to go out for risk assets. We began Tuesday in a mildly optimistic mood as the equity market looked to stem the losses from Friday and Monday. Early indications from Asia and Europe were good, and US futures were pointing to a higher open.

SPY news

The optimism was shortlived, however, when consumer confidence data and JOLTS job data both showed mildly positive signs. This meant investors felt the US economy could take a further 75 basis point hike, and so bond yields all moved higher after the data. Naturally, higher bond yields meant lower equity valuations, and so it proved.

It appears to be more of the same this morning as European markets remain under pressure and US futures are looking for a flat open at best. Oil prices at least have stumbled after reports of a US-Iran nuclear deal being imminent. We must point out that reports of a deal being imminent have been imminent for about the last six months, so optimism seems misplaced. Regardless, even if a deal is forthcoming it seems OPEC+ will announce supply cuts if that does indeed happen. At least Bitcoin continues to hang on to the $20,000 level and is back higher this morning, so there is some risk appetite somewhere. European markets are under the gun after another high inflation print. Possibly not as high as some had feared, but the print was still above consensus at 9.1%. Bond yields have all ticked higher again in Europe this morning, leading US yields also higher in their wake. 

SPY forecast

More declines are in store on Tuesday, and the SPY more or less reached our earlier support at $395. It is now also below the 50-day moving average, having failed at the 200-day in the peak of the rally, so the signs look ominous. However, the market will begin to focus on Friday’s jobs report, and we expect the remainder of the week to remain choppy. The bears are in control for now, but expect some position closing before the jobs report. 

Market breadth measures continue to worsen with the number of stocks above their 50, 100 and 200-day moving averages all now below 50%. 

Stocks above 50-day MA (blue line), 100-day (orange line), and 200-day (green line)

For intraday trading, $398 is Tuesday’s point of control and remains the bullish pivot.

SPY 15-minute chart

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