Market Analysis

SPY|QQQ Monday 1PM 12/30/2024

December 30, 2024 4 min read

Market Sentiment Analysis

Overall Market Sentiment

SPY (S&P 500 ETF):

Based on the analysis of the SPY 30-minute intraday data for the last 13 bars, the market sentiment appears cautiously bullish. The ETF has shown an upward momentum with the recent close at 591.44, indicating an increase from prior sessions. Notably, volume spiked significantly during the first bar, whereas the subsequent trading periods showed a decrease in volume, which could suggest some resistance around the recent highs. A consistently rising close against the backdrop of diminished volume might indicate that although buyers are enthusiastic, they may be confronting minor selling pressure.

QQQ (Nasdaq-100 ETF):

The QQQ follows a similar script as SPY, showing strong upward momentum overall; the ETF closed at 519.12 in its last trading session. Throughout recent bars, there’s been a clear upward trend, with prices closing near high levels indicating persistent buying interest. The volume pattern is less intense compared to SPY, suggesting relatively steady growth and confidence in the current trend without major fluctuations in trading interest.

VXX (Volatility Index):

For VXX, steady declines are evident with the recent close at 44.46, reaching towards the lower bounds of the day’s range. This movement hints at declining volatility expectations in the market, often concurrent with bullish sentiment for broader indices like SPY and QQQ. The absence of sharp spikes signifies that investors are not overly concerned about imminent market turbulence, supporting a more stable environment favoring equities.

Sector Analysis

Analyzing the sector ETFs, sectors like XLK (Technology) and XLY (Consumer Discretionary) seem to show stronger upward movements compared to others with persistent rising trends and stability. Noteworthy is the stability in XLI (Industrials) and XLU (Utilities), signaling some sectoral diversification by cautious investors aiming for defensive plays. On monitoring sector rotations, it appears that money is flowing from recently underperforming utilities and consumer staples into technology and industrials, driving gains in those high-beta areas.

Key Levels to Watch

SPY:

Support: ~585 is a notable short-term support level given recent price action.
Resistance: The area around 592 may present resistance, as indicated by recent peaks.

QQQ:

Support: Look for support around 512, a prior consolidation area.
Resistance: Levels around 520-522 should be closely monitored as potential resistance zones.

Scenarios

Bullish Scenario:

For SPY and QQQ, continuation of recent bullish trends might be driven by favorable economic data, such as lower unemployment figures or strong GDP growth forecasts. Likewise, earnings surprises or continued downtrends in the VXX can fuel buying interest. Technically, breaking past key resistance levels as outlined may attract further buyers.

Bearish Scenario:

On the downside, a bearish scenario could be realized with unexpected geopolitical developments or dour economic signals, such as rising inflation or rate hikes by the Fed. If SPY falls below 585 and QQQ below 512, it may trigger a technical breakdown, leading to further selling.

Overall Commentary

In summary, the overall market sentiment for the current period is cautiously positive. With reduced volatility expectations as signaled by VXX and consistent upward trends in major indices like SPY and QQQ, it suggests a generally stable economic outlook. However, concerns around financial stability, inflation, and geopolitical risks are latent factors that could potentially disrupt current trends. Traders may continue to look for opportunities especially in strong performing sectors like technology, yet retain preparedness for quick reversals should market conditions change.