SPDR S&P 500 ETF Trust (SPY) Stock News and Forecast: Why is the SPY going lower?

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  • SPY keeps bears occupied as further falls anticipated.
  • SPY closes down after a mid-week bounce.
  • Technically SPY still looks bearish with a lower low.

The stock market remains nervous and Monday saw this play out with a mixed session for mainline indices while the Nasdaq (QQQ) underperformed. Yields have started to rise as bond investors once again face off with the Fed. The yield on the US 10 year has now risen above 1.5% and as a result interest rate sensitive tech stocks suffered on Monday. The Nasdaq closed nearly 1% lower. The SPY stock ETF meanwhile closed 0.29% lower at $442.64. 

The intraday 15-minute chart above shows the last few sessions being pretty rangebound as investors search for direction. Early last week brought a heavy sell-off before the Fed stepped in to calm things but the bounce has not really followed through, momentum is starting to wane. 

Below we can see the blowout in the correlation between the Nasdaq (QQQ) and the US ten year. Time for this to come back into line, so that means it’s either yields or Nasdaq (QQQ) that goes lower.

SPY stock forecast

We have already pointed out how this dip is different from all others this year in that it was deeper than the previous dip. This is a classic downtrend then, a lower low than the previous. No way around that. We also have a series of lower highs, again a classic downtrend. In order to break that cycle, the SPY needs to break $448.92. We remain with our call from yesterday before the open “This late bounce to us looks like an opportunity to short. If you do, please use stops, always with the stops!” SPY is still hovering around the flatline but failing to break the 9 and 21-day moving averages with any significance. Volume is also still going lower so this bounce is not attracting buying volume. The VIX surged nearly 9% yesterday and is now back above 20. In general, this year stocks do not like the VIX above 20, and they definitely do not like when it spikes. 

FXStreet View: Bearish, bullish above $448.92.