SPY
SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is our first point of focus. The SPDR S&P 500 trust is an exchange-traded fund which trades on the NYSE Arca under the symbol. SPDR is an acronym for the Standard & Poor's Depositary Receipts, the former name of the ETF. It is designed to track the S&P 500 stock market index. This fund is the largest ETF in the world.
The oscillations in the broad US equities market have been driven predominantly by several major forces in play over the previous six weeks. The most important factors driving the price of US stocks include seasonality, as money managers position for competition with each other into the end of the year where they will be compared against performance benchmarks, and navigating the twists and turns of the rhetoric and headlines associated with the trade war between the United States and China.
On the one hand, money managers don’t want to be under positioned to an equities market that has recently broken out to new all-time highs. But, on the other hand, those in control of large resources also don’t want to be caught leading too long into a situation where talks between the United States and China could potentially break down.
That has led to a difficult battle resulting in significant whipsaws for those in charge of large amounts of money.
At this point, the public relations needs of the United States government and the Chinese government will likely supersede their willingness to continue to play a game of chicken in which none shall come out the winner. However, at the same time, we see extreme valuations in play and a failure of economic data to keep up with equity prices. This clearly presents a risk.
At this stage, this is the defining conundrum guiding stocks involved in the S&P 500.
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