SPDR S&P 500 ETF Trust SPY Stock News and Forecast: Can this rally become a new bull?

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  • SPY closes Friday in the green and positively for the first week in 4.
  • QQQ also rallies as risk assets and high beta outperform.
  • Bitcoin bounces above $20k and continues higher over the weekend.

Risk assets closed out th eweek in ebullient mood as a rising tide lifted all boats on Friday. Over 90% of stocks closed higher on Friday across the Nasdaq and NYSE and we note someinteresting observations about the what happens next in such scenarios. 

That looks promising and indeed the bullishness could continue with Tuesday’s CPI report imminent. We may get a little position squaring ahead of the report on Monday but overall expect headline inflation to indeed have peaked. Oil is lower, shipping rates are lower, housing prices are falling, and used car prices are falling. Comparisons are high so the bar is low for the CPI number to have peaked. This will play into the narrative of a soft landing, the Fed will pivot and should lead to an extension of the current rally. 

SPY news

So all on hold until Tuesday then. Our only slight concern is that the market fully expects inflation to have peaked. If it hasn’t we will get a pretty sharp knee-jerk sell-off. The market has already priced in a 75 bps hike in September and is comfortable with that. The market has already priced in peak CPI and now we are on the downward slope., Anything that changes this narrative will see equities lower. In terms of trading into the CPI number, if you want to, that is a high-risk game. But I believe the risk-reward is to the downside. Expectations are for the number to have peaked. If it has and we get confirmation then this rally should extend as the week goes on. But if CPI is high then we will get a sharp sell off. So in my view, the risk-reward is skewed to the downside even though I think the CPI will be ok and the market will carry on rallying.

SPY forecast

Wow, what a move on Friday. Powerful as we showed above with 90% of stocks closing in the green and a strong move above the 50-day moving average. If the tweet from ZeroHedge is accurate then expect some CTA and FOMO traders to jump on this trend. 

$401 now the pivot, above and we stay bullihs with a target of $417 and the nthe 200-day moving average at $426. CPI is the key we need it to fall. We also have triple withching options expiry on Friday so things could get chopppy.