SPY Poised for Breakout Ahead of CPI, Fed

If buyers are confident, we could see a nice trend day today head of an eventful week.

SPY has broken above an ascending trendline going back to March 6. I generally do not like breakouts of ascending trendlines but I do keep them in mind for potential backtests. That this trendline was tested multiple times before finally breaking, I think, gives it a bit more emphasis.

SPY closed yesterday just shy of it’s highest close since August 16, 2022. It appears we’re likely to get follow-through today which, I think, will be crucial for buyers going into next week where we have back-to-back events of CPI (Tues AM) and Fed minutes (Wed PM). At the same time, the market could pull back within this week’s range and, if so, then most likely we get no resolution until Thursday.

On the M5 below we’ve had a descending TL that was working pretty well until yesterday afternoon where SPY never really wanted to retreat. This was a good sign for potential buyers to hunt down some strong stocks and stalk some positions. SPY would break over the TL and retest it from the backside by EOD.

That said, overnight we have fallen back below the TL and, as of this writing, are testing it again from below where, for the moment, it is being rejected. If SPY cannot get over and hold $429 early it likely means range-bound into mid-next week. Should we get over early, I would look for a back test again as sellers take profits. I’d look for buyers to hold that $429 level with volume and, if the market is able to do that then we could have a good trend day.

TSLA was the talk overnight with a nice AH move. Yesterday TSLA tested the April 2022 descending TL and resistance from mid-Oct, 2022 with high volume getting a breakout in the final hour of trading. Whatever news came out after market close (I do not pay attention to news) sent it even higher; at one point as high as $249.

TSLA has shown good relative strength over the past month making this breakout unsurprising. It will be interesting to see if the breakout holds - I think it will for some time (weeks). But I’m not sold that TSLA is on it’s way back to the $300’s. We’ll see.