the spdr sp 500 etf trust spy was volatile friday gapping up to start the trading session before ran into sellers who caused the market etf to drop half a percentage point intraday after data released from the university of michigan showed inflation expectations remain elevated expectations that inflation will remain stubborn rose in may and traders are now pricing in another rate hike when the federal reserve issues its decision next month investors hoped the fed would pause after applying its seventh consecutive rate hike in may the news had the spy looking to print a bearish engulfing candlestick which could indicate lower prices will come again on monday if that happens the recent uptrend the etf began trading in on may 4 will be negated and a downtrend could be on the horizon a downtrend occurs when a stock consistently makes a series of lower lows and lower highs on the chart the lower lows indicate the bears are in control while the intermittent lower highs indicate consolidation periods traders can use moving averages to help identify a downtrend with descending lower timeframe moving averages such as the eightday or 21day exponential moving averages indicating the stock is in a steep shorterterm downtrend descending longerterm moving averages such as the 200day simple moving average indicate a longterm downtrend traders wishing to trade the volatility in the stock market can use miax’s spikes volatility products the products which are traded on spikes volatility index spike track expected volatility in the spdr sp 500 over the next 30 days want direct analysis find me in the bz pro lounge click here for a free trial the spy chart the spy reversed into an uptrend on may 4 after printing a double bottom pattern at near the 404 level on that day and april 25 the spy’s most recent higher high was formed on wednesday at 41454 and the most recent higher low was printed at the 40887 mark on that same day   if the bearish engulfing candlestick is confirmed with lower prices on monday selling could accelerate and drop the market etf down toward the 50day simple moving average sma if that happens bullish traders would like to see the spy print a bullish reversal candlestick such as a doji or hammer candlestick near the indication to suggest a possible reversal is in the cards   bearish traders want to see the spy break down under the 50day sma which could cause the etf to drop and back test the 200day sma which is an important bellwether indicator if the spy were to lose that level more downside could occur and high volatility would be likely   the spy has resistance above at 41489 and 42076 and support below at 408 and 404 read next how has the stock market historically performed once inflation peaked