The S&P 500 gapped up 0.59% to start the trading day on Friday and continued to edge higher intraday to close out the first half of 2023 up about 16%. This run was led by Apple Inc AAPL, which crossed the $3 trillion market-cap level.
The index has been guided higher by the companies with the highest weighting, with all the top five holdings within the S&P 500 up significantly since the start of the year.
Since the Dec. 30 market close, Apple surged about 47%, Microsoft Corp MSFT increased 44%, Amazon.com, Inc AMZN rose almost 55%, NVIDIA Corporation skyrocketed a whopping 188% and Tesla Inc TSLA soared about 113%.
The S&P 500 and the SPDR S&P 500 ETF Trust SPY are showing signs the local top may be in and a retracement, at least to start the second half of 2023, may be in the cards because they have formed triple top patterns on the daily chart.
The triple top pattern on the S&P 500 has printed at 4,448.87 and the SPY has formed the pattern at $443.90.
Although a pullback is likely to come over the short-term, especially heading into the Federal Reserve’s next decision on interest rates scheduled for July 25 and July 26, a continuation of the bullish cycle could continue into the end of the year.
As the Fed’s decision approaches, with the market expecting the central bank to apply another rate hike, volatility could also increase.
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Here's a look at the SPY heading into the second half of 2023.
The SPY Chart: The SPY printed a triple top pattern near the $444 level when Friday’s price action is compared to similar price action on June 15 and June 16. The pattern indicates a retracement is likely on the horizon and on Friday, the SPY was looking to form an upper wick at that level, which could indicate the pullback will come on Monday.
The SPY also has a gap below that exists between $438.28 and $441.11. Gaps on charts are about 90% likely to fill and if the ETF falls over the next few trading days, the SPY may find support at the lower range of the gap.
The SPY’s relative strength index (RSI) is measuring in at about 67%, which is edging toward overbought territory. It should be noted, however, that stocks and ETFs can remain over-extended to the upside and the downside for long periods of time.
If the SPY can close the trading session near its high-of-day and over the $444 mark, the triple top pattern will be negated and the ETF could spike higher on Monday.
The SPY has resistance above at $447.06 and $454.05 and support below at $436.79 and $429.80.
Photo: Mohamed Hassan from Pixabay
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