Picking Your Spot Remains Elusive for the SPDR S&P 500 ETF Trust 

SPY Stock - Picking Your Spot Remains Elusive for the SPDR S&P 500 ETF Trust 

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The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) lost 1.7% in Monday’s trading. SPY stock is now down 7.9% on the year. Every time the exchange traded fund (ETF) gets above $450, it struggles.

While it’s tempting to buy some SPY when it falls below $450, the latest consumer price index (CPI) increase of 8.5% in March suggests caution remains the name of the game. On three occasions over the past year, SPY has fallen back after going over $450. I believe it will happen again before too long. But first, it’s got to get there. 

There’s no rush to buy SPY. The markets aren’t going anywhere.

SPY went over $450 only to fall back down in September 2021, February 2022, and the end of March. However, from mid-October 2021 through mid-January, SPY rose above $450 and stayed there for a solid three months. That’s an indication that $450 is both a floor and a ceiling at the moment. 

The question is where it heads from here.

The S&P 500 closed yesterday’s trading at 4,412.53. Bank of America (NYSE:BAC) recently suggested that it will finish the year below 4,000. If that’s the case — I’ll assume it closes out the year on Dec. 31 at 3,999 — investors can expect SPY to fall approximately 9.4% over the next 8.5 months to under $400.

Don’t Be in a Hurry With SPY Stock

Michael Burry, the investor behind The Big Short, recently argued that the S&P 500 is overvalued. Burry believes that share prices are ready to tumble because the S&P 500 Equal Weight Index has a price-to-sales multiple of over 1.9, almost double the multiple for most of the 1990s and 2000s. 

Before you dismiss Burry’s assertions, it’s important to remember he did get the mid-2000s housing bubble right. If you’ve got money to put into SPY, there’s enough investor pessimism right now to suggest the odds are good its price will drop over the next few months. 

$450 is a big-time ceiling for the foreseeable future from where I sit. So don’t be in a rush to put your money into play.    

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.


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