A Look At The SPY Ahead of Key Fed Meeting, Turbo Earnings Week: What To Watch

The SPDR S&P 500 SPY was trading lower on Wednesday, consolidating with an inside bar as the stock market awaits the Federal Reserve's decision on fed fund rates, which is expected to print at 2 p.m. EST.

Big tech stocks were also consolidating ahead of the event, with Apple, Amazon, Alphabet and Tesla all trading sideways in ongoing bull flag patterns.

If the market reacts bullishly to the Fed’s decision, big tech’s bull flags could break upwards, setting the market into a major rally. Of course, with Meta Platforms printing its earnings tonight and Apple, Amazon and Alphabet reporting earnings tomorrow, a bearish reaction to any of the prints could weigh on the SPY.

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Fed chairman Jerome Powell’s press conference, scheduled for 2:30 p.m. EST could also affect any 2 p.m. market movement and traders and investors will be listening closely for clues on the central bank’s outlook into the spring, when the Fed meets next on March 21-22.

Economists are expecting the Fed to apply a 0.25% interest rate later today, bringing the benchmark rate to a range of between 4.5% and 4.75%. if the Fed deviates from the expectation, massive volatility could inject chaos into the stock market.

From a technical analysis standpoint, the SPY looks headed higher –having settled into a strong uptrend and after backtesting the psychologically important $400 mark as support Monday and Tuesday.

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The SPY Chart: The SPY broke up from a sideways trading pattern on Jan. 6 and has been trading in a strong and consistent uptrend since then. The ETF’s most recent higher low was formed on Monday at $400.59 and the most recent higher high was printed at the $408.16 mark on Friday.

• On Monday and Tuesday, the SPY retraced to back test the $400 mark as support and held above the level, which caused bullish volume to come in on Tuesday morning and drive the ETF up to close 1.55% higher. On Wednesday, the market ETF was consolidating lower, with an inside bar pattern on much lower-than-average volume.
• The inside bar pattern leans bullish in this case because the SPY was trading higher before forming the pattern. It’s likely the SPY will break up or down from Tuesday’s range this afternoon as the market absorbs the Fed’s rate decision.
• If the SPY breaks up bullishly and rises above Friday’s high of the day, the uptrend will remain intact. If the SPY falls under $400, the uptrend will be negated and the market ETF will be in danger of falling under the 200-day simple moving average.
• The SPY has resistance above at $408 and $414.49 and support below at $404 and $402.67.

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