Market Analysis

SPY|QQQ Monday 1PM 7/01/2024

July 1, 2024 3 min read

Market Sentiment Analysis:

Overall Market Sentiment:

SPY (S&P 500 ETF):
Based on the 30-minute intraday chart for SPY over the past 30 days, the recent 13 bars exhibit some interesting price-volume development. The SPY has shown stable upward price action with occasional pullbacks. The moving averages suggest that the short-term trend is still intact (the 10 MA running above the 20 MA). Volume has been relatively consistent but note that there has been a notable downward movement a few bars back, followed by a strong recovery.

Key recent observations:
1. Volumes: An increase in volume coincided with the price’s dip and subsequent recovery, indicating robust buying interest at lower price levels.
2. Price movement: SPY showed a notable move from approximately $542.88 to $545.21 in just a few bars, pointing to a strong bullish momentum.

QQQ (Nasdaq-100 ETF):
For QQQ, the 30-minute intraday chart is signaling a similar sentiment as SPY but with slightly more volatility. The recent 13 bars indicate higher swings between highs and lows. Like SPY, QQQ’s moving averages suggest an ongoing uptrend.

Key observations:
1. Volumes: There was a noticeable spike during upward movements, particularly in the bars reflecting trades at around $479-$481.
2. Price movement: QQQ’s price maintained a range, indicating consolidation with some sharp movements, hinting at potential breakout or breakdown scenarios soon.

VXX (Volatility Index):
The VXX chart over the same period highlights decreasing volatility. There have been no significant spikes recently, and the volume has somewhat tapered off.

Key observations:
1. Volumes: Lower volume across recent bars, consistent with less fear or uncertainty.
2. Price movement: VXX maintaining a low level around $10.61-$10.72 suggests a lack of panic or strong hedging activity among investors.

Sector Analysis:

Examining the sector ETFs:
– Leading Sectors:
– XLI (Industrials) and XLK (Technology) have shown strong performance with relatively higher volumes and stable uptrends.
– XLC (Communication Services) and XLY (Consumer Discretionary) also indicated strength with consistent upward price movements.
– Lagging Sectors:
– XLP (Consumer Staples) and XLV (Health Care) exhibited more sideways movements with muted volume suggesting market’s temporary disinterest.
– XLU (Utilities) saw minor gains but relatively lower volumes, signaling it’s not the market’s focal point.

Key Levels to Watch:

SPY:
– Support: Near $540.00 and previously tested $538.00 levels.
– Resistance: Around $545.21 and strong psychological level at $547.00.

QQQ:
– Support: Maintains strong support around $478.03, with significant support further down at $475.00.
– Resistance: Currently at $481.23; breaking this could push towards $483.00.

Scenarios:

Bullish Scenario:
– For SPY and QQQ, a breakout above current resistance ($545.21 for SPY and $481.23 for QQQ) fueled by strong economic data or robust earnings reports could lead to a rally.
– Moving averages need to sustain above longer-term averages with increased volume during upswings.

Bearish Scenario:
– A breakdown below key support levels ($540.00 for SPY and $478.03 for QQQ) potentially driven by negative news like geopolitical tension or weak economic stats could trigger a sell-off.
– Spiking volumes on down days and VXX moving higher will be critical to watch as indications.

Overall Commentary:

The overall market sentiment remains cautiously bullish with leading sectors predominantly in the cyclical and growth sectors like Industrials and Technology. Stable volumes suggest confidence, though the market remains watchful for potential volatility. Key support/resistance levels will dictate short-term trading opportunities, with upcoming economic reports likely influencing market direction. Focus on breakout patterns and increased volume signals for trading entries.