SPY Trends Into June: What Cycle Models Say About the Next Move

SPY Trends Into June: What Cycle Models Say About the Next Move

Both SPY and QQQ continue to project an intermediate cycle low forming in early June. While the long-term cycle remains in an uptrend, helping to dampen a pullback, there’s still some downside likely to be worked out ahead. We must remember that some of the biggest down days often occur just ahead of a cyclical bottom.

This morning’s inflation data adds another layer to the picture. The PCE price index rose 2.1% year-over-year in April, down from 2.3% in March, marking the lowest rate since September. The Core PCE, which excludes food and energy prices, increased 2.5% year-over-year, also down from 2.7% in March.

Personal income rose by 0.8% in April, marking the largest gain in three months, driven by wage growth and increased government social benefits. All of that is quite positive, but consumer spending growth slowed to 0.2% in April from 0.7% in March, and with that, savings increased, indicating that households are becoming more cautious, likely due to economic uncertainties and the anticipation of higher prices from upcoming tariffs.

Our cycle models continue to show a potential intermediate bottom (dip) around June 4. From there, we expect a stronger uptrend to develop into the summer. If price action confirms afterward, especially when the SPY and QQQ hold above key levels like the 3-day EMA and 5-day SMA, it would be a strong sign that the low is in, and we can then add or initiate long positions.

Until then, stay cautious. Don’t chase the recent upside with more than a short-term trade. Let the longer setup develop. Once the cycle and technical structure are confirmed, we can have more buying conviction.

Why Structure Is Still King

In every phase of the market, structure reveals the path of least resistance. Rather than chasing headlines or reacting to emotion, our strategy focuses on structural confirmation. When price consistently respects its channels and moving averages begin to align upward, we get the green light. Structure is what transforms probability into action—it’s the difference between noise and signal.

We aren’t interested in chasing breakouts or guessing bottoms. Instead, we rely on objective signs of strength, such as sustained closes above the 2/3 and 3/5 moving averages. These markers help us define a setup that isn't based on sentiment or narrative, but on actual price behavior. This disciplined method keeps us focused on real opportunity, not speculation.

Check our post on The Smarter Buying the Dip Strategy: Let Structure Pull You Back In for more info.

How Market Cycles and Seasonality Interact

One valuable perspective to layer on top of our cycle models is market seasonality. Historically, early summer months like June often see a resumption of strength following spring pullbacks. When this seasonal pattern aligns with projected cycle lows—as we’re seeing now—the case for a more durable uptrend strengthens. While seasonality is never predictive on its own, it provides context that complements structural signals.

It’s this fusion of data—cycles, price structure, and seasonality—that builds conviction. Seasonality gives us the weather, but cycles and price tell us whether we should leave the house. Right now, the forecast is aligning with structure to suggest opportunity is forming. But again, confirmation must be our signal to act.

When Not to Trust the Rally

There are moments when rallies emerge despite an ongoing bearish cycle. These bounces may look convincing but often lack institutional support. If moving averages are still sloping down, or price fails to break above key resistance zones, it’s better to remain cautious. Not every bounce deserves our capital. Knowing when to stand aside is just as critical as knowing when to step in.

Especially in bear phases, rallies can be sharp but short-lived. The temptation to jump in early is real, but without structural alignment, we risk buying into a trap. Our method focuses on waiting for upward confirmation, such as a new high above a prior swing level or a crossover of short-term averages, before committing capital. Staying patient can mean avoiding costly whipsaws.

The Role of Tech Stocks in Driving Cycle Turns (SPY vs. QQQ)

Not all sectors respond to cycles equally. Tech stocks, heavily weighted in the QQQ, often lead both breakdowns and recoveries. During periods of consolidation or bottom formation, watching leadership in QQQ can help anticipate the quality of the next rally. If QQQ breaks out before SPY, it’s often a sign that institutional appetite is returning. This rotation into tech—when backed by cycle confirmation—can fuel outsized gains.

This leadership dynamic is particularly important when tech is recovering from a deep correction. If semiconductors, software, or cloud stocks begin to rise ahead of broader indices, it can serve as an early indication that the broader tide is turning. Recognizing this sector leadership through the lens of cycle timing can provide an important edge.

The Discipline Behind Buy Stops

Buy stops aren’t just about automation—they’re about discipline. They allow us to remove emotion from the process and re-enter only when structure validates the setup. A properly placed buy stop lets us rejoin momentum with defined risk. It’s one of the most effective ways to avoid false starts while staying aligned with the market’s true direction.

Instead of guessing the bottom or trying to catch falling knives, we let price prove itself. When a buy stop is triggered, it often signals renewed participation from institutional buyers. It also keeps us from overtrading in range-bound conditions. Combining buy stops with well-defined moving average triggers helps us take action at exactly the right time.

Why Patience Beats Prediction in Sideways Markets

In choppy or sideways markets, premature entries often lead to frustration. It’s tempting to forecast reversals or chase every bounce, but Steve’s method emphasizes patience. Letting the market show strength through confirmation—such as moving averages turning up or price pushing above key channels—is how conviction is built. Reacting to structure is more sustainable than trying to predict it.

Patience is not passivity—it’s preparedness. Sideways markets are where discipline is forged. Rather than trying to “will” a trend into existence, we watch for the signs that it’s emerging. Our setups are designed to get us involved only when the probability is on our side. Until then, we wait.

Letting Structure Pull You Back In

There’s power in restraint. When stops are triggered, many traders stay sidelined out of fear. But when structure turns—when the 2/3 and 3/5 moving averages flip upward and price reclaims key channels—we don’t hesitate. We re-enter with clarity and control. Letting structure pull us back in isn’t passive; it’s precision in action.

This approach allows us to participate in the next leg of a rally without the need to guess or rush. Buy stops placed just above the recent high, or above a 5- or 10-day price channel, serve as mechanical triggers for re-entry. If the trend resumes, we’re in. If it doesn’t, we remain protected. That’s discipline in practice.

What Divergences Between Price and Cycles Can Signal

Sometimes, price action may appear stronger than the underlying cycle, or vice versa. These divergences can offer early clues. For instance, if price holds steady or rallies slightly while the intermediate cycle points lower, it may indicate underlying accumulation. Conversely, if price weakens despite a projected upturn, caution is warranted. In either case, structure—especially how price behaves around key averages—remains the deciding factor in confirming or rejecting the cycle signal.

Divergences don’t replace our models, but they highlight where extra scrutiny is warranted. Think of them as a “yellow light” in traffic—they signal that conditions might change quickly. If divergence aligns with a structural confirmation, it strengthens our case. If it contradicts it, we step back and wait.

People Also Ask About SPY Trends

What is the intermediate cycle in SPY?

The intermediate cycle represents a market rhythm that spans several weeks to months. In SPY, it helps identify trend shifts within the broader movement. Traders use it to time entries and exits, particularly when it aligns with long-term cycles. This cycle helps remove the noise of day-to-day fluctuations and provides a more reliable signal for positioning.

How do moving averages confirm SPY trends?

Moving averages like the 3-day EMA and 5-day SMA are used to smooth out price noise. When they begin to slope upward and price breaks above them, it can signal renewed momentum and confirm that a trend change is underway. These averages serve as objective markers, offering both entry points and areas for stop placement in trend-following setups.

What’s the significance of June seasonality for SPY?

June has historically shown strength in post-pullback recoveries. When this seasonal tailwind aligns with cycle model projections of a bottom, the chance of a sustainable uptrend increases. However, structure must confirm. The pattern doesn’t guarantee success, but when combined with price strength and positive breadth, it enhances the probability of a longer trend forming.

Why is QQQ’s behavior important for SPY?

QQQ often leads major moves in the market. If QQQ begins to rally ahead of SPY—especially with cycle confirmation—it signals renewed risk appetite and may foreshadow broader index strength. Tech stocks tend to be more volatile and more responsive to economic shifts, making QQQ a useful early-warning indicator for broader market health.

What should traders watch for before re-entering SPY?

Traders should look for confirmation signals: moving averages turning up, price holding above key support levels, and alignment with cycle timing. Without these, re-entry can be premature. Additionally, volume expansion and sector leadership—especially from growth areas like tech—can further validate that the rally is gaining traction.

Resolution to the Problem

The market is nearing a potential inflection point. With the cycle projecting a low near June 4, and seasonality beginning to favor bullish setups, we are entering a window of opportunity—but only if structure confirms. Tech sector leadership, confirmation across SPY and QQQ, and a disciplined approach to entry can guide us through the noise. Wait for price to validate the cycle turn.

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Conclusion

Cycles don’t predict—they prepare us. Right now, the preparation is clear: a low is likely forming, and if structure follows, it may mark the beginning of the next sustainable trend.

Patience, confirmation, and proper sizing remain our core principles. When they align, so do results. These tools are not about precision timing but creating a durable framework for decision-making. Through the disciplined use of structure, cycles, and averages, we stay on the right side of the market—not because we know, but because we respond.

Author, Steve Swanson