SPY & QQQ Monthly, Weekly, Daily Charts

And thoughts on how rest of Feb and Mar will go

This week we should get some sort of bounce off the SPX Daily MA200 trendline.

However, it’s also the end of the February month, so at what price the month and week closes are going to be absolutely critical information-wise if this is a consolidation like we saw during mid-Dec-Jan or a bigger correction down towards 3800 or lower.

My hunch and to line it up with the flows, is that this is more likely to be a correction since the terminal rate won’t be settled for the next few months. It will lend more uncertainty at how high and for how long the Fed really has to go given Core PCE inflation is staying elevated and persistent.

The market hates uncertainty—it wants more certainty and why when looking at the monthly to weekly RSI levels, it hasn’t shown much strength to convince me we’re back in a new bull market.

At the same time, based on soft data and other data-points I’m looking at (private markets, layoffs, etc.) the labor market should start to show a lot more weakness and the Fed will still raise a few more BPS and stay tight through such labor weakness because it’s what they want to defeat inflation.

This will spook the market because we can swing from creating hundreds of thousands of jobs to then suddenly losing hundreds of thousands of jobs. The jobs market seemingly looks ok until suddenly it doesn’t. Based on job openings and wage growth inflation, I don’t see significant deterioration in the labor market just yet but the leading indicators are telling us to expect a bigger economic downturn around the corner.

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*This my personal blog and is not investment advice—I am not a financial advisor but a random person on the internet who does not have a license in finance or securities. This is my personal Substack which consists of opinions and/or general information. I may or may not have positions in any of the stocks mentioned. Don’t listen to anyone online without evaluating and understanding the risks involved and understand that you are responsible for making your own investment decisions.

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SPY Monthly, Weekly, Daily Charts

SPY Monthly

Monthly EMA13 and MA20 are flattening, which means more sideways action until price moves substantially higher or lower to curve up or down on the monthly. Based on the weekly chart below, it could mean decline over time.

Notice SPY weekly RSI ~55 serves as a rejection point vs 2021 (where RSI stayed consistently 55-70 ranges) and you compare to 2022 we are hitting oversold 30 RSI conditions. So will we revisit 30 RSI on the weekly during 2023?

SPY Weekly

Lots of death crosses and rejections on the weekly. Weekly MA20, 50 are curving down since the market top while MA100 is starting to flatten and MA200 is still in an upward trend. This is the longest the weekly EMA13 has been above the MA20 since SPY topped.

SPY Daily

MA200 is declining however the MA20, 50, 100 have curved back upwards since Oct lows. The question for this pullback is if it is a consolidation period where similar to Dec to early Jan where EMA13 < MA20 and 3800 was tested a few times then the market resumed higher into Feb as the EMA13 > MA20.

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QQQ Monthly, Weekly, Daily

A close below the Monthly EMA13 on QQQ would be bearish for Feb and can mean more downside over the next few months as it lines up with the higher for longer rates macro environment + persistent inflation.

Now let’s compare SPY vs QQQ monthly, weekly, and daily charts and why I have been warning about tech/growth since publishing on Substack back in Aug 2022. I think people will be in for a surprise when tech/growth continues to sell off further is my forecast.