Market Analysis

SPY|QQQ Friday 1PM 7/05/2024

July 5, 2024 4 min read

Market Sentiment Analysis

Overall Market Sentiment

SPY (S&P 500 ETF):

Examining the 30-minute intraday chart for SPY over the past 30 days, with an emphasis on the recent 13 bars, we observe the following:

Price Movement: SPY has shown a steady upward trend, maintaining higher lows and higher highs, indicating strong buying interest. The latest bars show SPY closing near its highs, suggesting a positive momentum that could continue.
Volume Trends: Recent 13 bars reflect decreasing volume which could point towards a consolidation phase before the next move. It’s essential to watch if volume picks up on the next directional move.
Moving Averages: Assuming a short-term moving average (e.g., 5-period) is trending above a mid-term moving average (e.g., 13-period), the bullish sentiment is corroborated.

QQQ (Nasdaq-100 ETF):

Similarly, for QQQ:

Price Movement: QQQ is mirroring SPY’s upward momentum. Recent bars show a tight trading range with minor pullbacks, further indicating a potential breakout if buying continues.
Volume Trends: Volume has tapered off slightly in the last 13 bars, suggesting potential consolidation. Traders should watch for a volume spike as a signal for the next move.
Moving Averages: Short-term moving averages staying above mid-term averages would reinforce the bullish case.

VXX (Volatility Index):

Price Movement: VXX remains relatively stable with minor fluctuations, closing higher in the most recent bar. This suggests low market fear currently but cautious watch is warranted for the VXX spikes as early warnings of market turbulence.
Volume Trends: Volume increases in VXX signal rising concern among investors. Recent higher closes with increased volume could hint at impending volatility.

Sector Analysis

Top Performing Sectors:

XLK (Technology): Consistent upward movement with minimal retracement, suggesting robust strength. Volume supports the bullish sentiment, making XLK a leader among sectors.
XLC (Communication Services): Stability with slight upward bias, supported by moderate volume. Positive sentiment here aligns with the overall tech-driven rally.
XLV (Health Care): Steady gains over the past 30 days, though volume trends indicate moderation in buying interest.

Notable Sector Rotation:

XLY (Consumer Discretionary) vs XLP (Consumer Staples): XLY shows slightly subdued momentum compared to XLP, hinting at a possible rotation from discretionary stocks to staples.

Key Levels to Watch

SPY:

Support Levels: 550.00, 547.00
Resistance Levels: 554.00, 556.00

QQQ:

Support Levels: 490.00, 488.00
Resistance Levels: 498.00, 500.00

Scenarios

Bullish Scenario:

For SPY and QQQ, a bullish outcome may be driven by:

Positive Economic Data: Favorable employment stats and economic indicators.
Strong Earnings Reports: Positive earnings surprises particularly from tech giants could propel indices.
Technical Breakout Patterns: SPY breaking above 554 with rising volume could validate the next leg higher. For QQQ, breaking 498 on rising volume would be a bullish sign.

Bearish Scenario:

Possible bearish signals for SPY and QQQ include:

Negative Economic News: Downbeat GDP numbers or Federal Reserve hawkish comments.
Geopolitical Tensions: Escalations that market deems significant.
Technical Breakdown Patterns: SPY falling below 550 with high volume. For QQQ, breaking below 490 with increased selling volume.

Overall Commentary

The market sentiment remains skewed toward bullishness, supported by positive price movements in key indices (SPY, QQQ) and above-average performances in leading sectors like Technology (XLK) and Communication Services (XLC). However, the modest rise in VXX and tapered volume in recent trading bars suggest caution. Key levels will dictate the next steps. Traders should stay vigilant for any economic announcements or geopolitical events that could tilt the current momentum either way. Sector rotation trends imply a balanced but cautiously optimistic market tone.