The SPY Shows Strength, Following PCE Reports And Ahead Of Key Jobs Data: The Bull, Bear Case

The SPDR S&P 500 ETF Trust SPY was trading about 0.3% higher on Monday at one point, temporarily breaking up above Friday’s high-of-day ahead of the March U.S. jobs report, expected to be released by the Labor Department Friday.

Just above the $411 mark, the market ETF ran into a group of sellers who knocked the SPY down from the high-of-day, back into Friday’s trading range.

Analysts expect the U.S. unemployment rate for last month to come in at 3.6%, the same rate logged into February. New jobs added are expected to decline, coming in at 235,000 compared to the 311,000 jobs added in February.

With the market closed on April 7 for Good Friday, traders and investors will have to wait until the following Monday to see how the stock market reacts to the numbers. Personal consumption expenditures (PCE) price index data released last week showed inflation was cooling, increasing by 5% year-over-year in the month of February, down from 5.4% in January.

The PCE data caused the SPY to surge by 1.41%. If jobs data comes in better-than-estimated, the market ETF could see similar bullish price action as traders begin to price in a pause in rate hikes.

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The SPY Chart: The SPY started trading in an uptrend on March 13 and has since made a consistent series of higher highs and higher lows. The ETF’s most recent higher low was formed on March 28 at $393.69 and the most recent confirmed higher high was printed at $402.49 on March 22.

• If the SPY traders lower on Tuesday, Monday’s high-of-day will mark the next higher high within the pattern. If that happens, the SPY may find support at the eight-day exponential moving average, which was been guiding the ETF higher since March 21.
• The 50-day simple moving average (SMA), which crossed above the 200-day SMA on Feb. 2, is curling higher, indicating bullish momentum is present in the stock market. Both areas are likely to act as strong support if the SPY enters into a multi-day bearish cycle.
• If the SPY closes the trading day with a significant upper wick, the ETF will print a shooting star candlestick, which could indicate lower prices are in the cards for Tuesday. If the SPY closes the trading day near the high-of-day price, it will print a bullish Marubozu candlestick, which could indicate higher prices or sideways trading is on the horizon.
• The SPY has resistance above at $414.89 and $420.76 and support below at $408 and $404.

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