Will Rising Oil Prices Smack the S&P 500?

spy s&p 500 index etf trading analysis chart august

As the market and economy cheer the rise in GDP, we can thank consumer spending: 70% of GDP, services (what consumer pay for in aid, help or information): 45% of GDP and government spending: about 19% of GDP.

Hence, one sector to watch carefully is retail or our Granny XRT.

xrt retail sector etf trading analysis chart august

The ETF XRT is still well underperforming the SPY over the course of this year. 

However, considering that, XRT looks ready to enter a bull phase with a golden cross. 

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Furthermore, as measured by our Leadership indicator, XRT is slightly outperforming the SPY.

The SPY chart is signaling a mean reversion sell signal potential, but otherwise, looks good as long as it holds 452-its July calendar range high.

XRT also sits at an inflection point as the July 6-month calendar range high is at current price levels.

While yields and oil prices rise, that could hurt consumers. 

For how long can the “Fed will pause/pivot in 2024” sentiment give markets and consumers hope if yields and oil both remain high?

For now, XRT shows more optimism than not. We will look at that chart carefully this month.

Oil is over $81 a barrel. We know if that continues, CPI PPI PCE-all of it will go up during the next round of economic releases.

That should curtail “Fed will pause” enthusiasm even if they do pause.

And clearly, high rates and high energy prices are bad for consumers.

crude oil rising prices analysis bullish chart august

Where should we look then to see what might happen next?

stock market ratio trading indicators macro view turning bearish chart august

Our Big View has been useful in helping us see the various risk factors.

The key ones we look at are how the SPY is doing versus the long bonds TLT,

How the TLT is doing versus the junk bonds HYG.

How gold is doing versus the SPY.

How WOOD is doing versus gold and how utilities are doing versus the SPY.

All risk factors right now say risk on.

Hopefully that continues to be the case.

Should that change, we will be right on top of it to share with you.

Stock Market ETFs Trading Analysis & Summary:

S&P 500 (SPY):  452 July calendar range hi now support 

Russell 2000 (IWM):  193 is the 23-month holy grail

Dow (DIA):  35,000 support 

Nasdaq (QQQ):  384 pivotal based on the calendar range

Regional banks (KRE):  Consolidating over its July calendar highs-positive

Semiconductors (SMH):  Holds here ok-needs to clear 161 and under 147 trouble

Transportation (IYT):  240 is the key underlying area of support

Biotechnology (IBB):  128 support now to hold like to see it clear 130

Retail (XRT):  67.40 the calendar range and pivotal

Twitter: @marketminute

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.