The S&P 500 (SPY) entered the week following a 6-day losing streak, three straight down weeks and the Facebook (FB) IPO let down. However, it managed to rebound in a week dominated by macroeconomic news and fears. The fact that the market could stop its decline in such a negative environment seems like a positive sign going forward; however, it will be difficult to sustain a rally if macroeconomic news continues to dictate trading action.
As we noted in our update last week (Market Update: S&P 500 Trading Range Breakdown And Key 'Risk Off' Indicators), the S&P 500 broke down from its trading range between 1,350 and 1,425, corresponding to 135.00 and 142.50 on the SPDR S&P 500 ETF. With the downward momentum building throughout May, it seemed like the SPY was heading toward its 200-day moving average at approximately 128, which was also near the bottom of the trading range from the first part of last year. However, the market rebounded and closed the week at 132.10.