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SPDR S&P 500 ETF Trust News and Forecast: Why is SPY squeezing?

  • SPY surges to end the week strongly with Fed speak boosting sentiment.
  • SPY is now back in neutral territory and may turn bullish.
  • Impressive rally despite Ukraine and Fed moves.

The S&P 500 (SPY) put in a very strong finish to the week in a move that completely was at odds with the growing bearish sentiment. Just when investors and many commentators had seen fit to put the nail in the coffin of bulls, they returned with force and staged a strong move higher back above $440. So why the sudden turnaround?

SPY Stock News

Technically, the failure to break the $410.64 low from February 24 was certainly a sign that things could be turning. We then had some positive noises from the possibility of peace between Ukraine and Russia. This saw energy prices collapse as oil returned to where it was prior to the start of the conflict under $100.

Oil chart, daily

This certainly helped stocks and put the brakes on the inflow of money to energy ETFs and oil stocks. The move back to “normal levels” in oil saw risk appetites grow, and gold and the US dollar all lost ground. The Fed then set up another leg to the rally on Wednesday. Yes, the Fed raised rates and signaled more to come, but the press conference was extremely bullish on prospects for the US economy, perhaps too bullish. Only time will tell, but equity markets took the bait and pushed higher again to close the week above $444. 

SPY Stock Forecast

The death cross was actually a massive reversal signal then! A death cross is when the 50-day moving average crosses below the 200-day moving average, and it did indeed signal the rally. We should note that the 200-day moving average is still upward sloping, and so the signal is more powerful when both the 50-day and 200-day are declining. The RSI as we can see has also broken out of its range strongly. Key resistance now comes from the 200-day moving average at $446. Break here and it is on to test the double top at $458.

This is the stronger level and may see a failure at the first attempt. However we should also be aware of the channel formation in place since December all time highs. The SPY is now back at the top of the channel, so it needs to break out to maintain momentum or else turn lower and target a break of Febraury lows at $410. 

SPY chart, daily


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