The SPDR S&P 500 SPY attempted to break up above an important psychological level at $400 on Friday but was rejected, to suffer its first bearish day since Monday.
The ETF has soared 3.91% between the Friday, July 15 closing price and Friday’s (July 22) high-of-day.
On the weekly chart, the SPY broke up bullishly from a symmetrical triangle to confirm a new uptrend on the larger time frame, which Benzinga called out on July 13.
Friday’s pullback appears healthy for the time being, because the markets largely enjoyed three bullish days in a row and downward consolidation is always needed when stocks or ETFs are rising in uptrends.
Traders and investors could also be growing wary of the Federal Reserve’s monthly meeting, scheduled to take place on July 26 and July 27, after which the fed will announce its next interest rate hike. The fed is expected to raise rates 0.75%, which has likely been priced in, but if the fed takes a more aggressive approach and hikes rates 1%, panic in the markets could ensue.
A number of powerhouse companies are set to report earnings this week, and the reaction to the earnings prints will affect the SPY. Some of the biggest names set to print their quarterly earnings this week include Alphabet, Microsoft, Meta Platforms, Apple and Amazon.
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The SPY Weekly Chart: The SPY broke up from the symmetrical triangle on July 19 and printed a higher high above the July 8 high of $390.64, which negated the downtrend. On the weekly chart, the SPY also printed another higher high, to confirm the weekly uptrend is still intact.
- The SPY may need to print another higher low on the weekly time frame. As long as the ETF doesn’t drop below the most recent higher low, which was printed at the $371.04 level the week beginning July 11, the uptrend will remain intact.
- On the daily chart, the SPY needs to hold above $380.66 in order to continue in its uptrend. On the daily time frame, the SPY may need more time, trading sideways or slightly lower, in order to gather the power needed to bust up through the $400 level.
- The SPY has resistance above $400 at $404 and $408 and support below at $394.17 and $385.85.
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