SPDR S&P 500 ETF (SPY) nears key price as fear and greed index stalls

The SPDR S&P 500 (SPY) ETF has recoiled recently in the past few days as investors wait for the upcoming Federal Reserve interest rate decision. The fund was trading at $442.62, where it has been at recently. It has jumped by almost 20% this year.

The SPY ETF has remained in a tight range in the past few days. A look at sentiment indicators shows that the fear and greed index has dropped to the neutral point of 48. At its peak this year, the index was at the extreme greed zone of over 80.

The junk bond demand gauge has moved to the extreme greed while market momentum has dropped to the greed area. Other gauges of the index have been mixed in the past few days.

The stock price strength, stock price breadth, safe haven demand, and put and call options have moved to the fear zone. Further, the VIX index, which is widely known as the fear gauge, has dropped to the neutral point at 15.

The SPDR S&P 500 (SPY) and other funds like Invesco QQQ and the SPDR Dow Jones ETF (DIA) tend to rise when the fear and greed index is rising and vice versa.

The next catalyst for the fund will be the upcoming Federal Reserve interest rate decision. Economists believe that the fund will leave interest rates unchanged between 5.25% and 5.50%. In a statement, an analyst at Northern Trust said:

“They’ve seen enough to take some more time, but I don’t think [the data] has been enough to meaningfully tilt the consensus toward, ‘Hey, we are done.’”

There are risks for American stocks. For example, the price of crude oil has jumped to $95, the highest level in more than 11 months and analysts believe that it will hit $100 soon.

Further, there is an ongoing crisis at the Panama Canal, where a drought has pushed water to the lowest level in years. As a result, tankers are taking longer to get to the United States, which could affect earnings.

The daily chart shows that the SPY ETF has been in a tight range in the past few days. Along the way, the fund has formed a symmetrical triangle pattern, which is nearing its confluence level. The fund is also consolidating at the 25-day and 50-day moving averages.

The SPDR S&P 500 ETF is also sitting at an important support since this price is at its highest point on June 16th. Therefore, with the triangle pattern nearing its confluence level, there is a likelihood that the ETF will jump to the next key resistance point at $450.

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