Market Analysis

SPY|QQQ Monday 4PM 12/16/2024

December 16, 2024 3 min read

Market Sentiment Analysis:

Overall Market Sentiment:

SPY (S&P 500 ETF):
The recent 13 bars of SPY’s 30-minute intraday chart indicate a slight bearish sentiment. There was a notable increase in volume during a price dip from 607.58 to 606.775, suggesting a sell-off. The moving averages likely show consolidation given the limited movement afterward. The culmination of events in the recent bars reflects potential indecisiveness or a preparation for a larger move.

QQQ (Nasdaq-100 ETF):
QQQ also exhibits some bearish characteristics, similar to SPY. There was a steep drop from 538.99 to 538.20 with increased volume, further emphasizing bearish momentum. Consequent bars see heightened volume with rather stable closing prices, indicating possible bottom-fishing or a pause in sell-offs.

VXX (Volatility Index):
A spike in VXX to 43.30 suggests increased investor anxiety, possibly reflecting concerns in broader market stability. Elevated VXX levels can suppress upward momentum in SPY and QQQ, enhancing bearish prospects if this volatility continues to spike.

Sector Analysis:

Recent activity across sectors shows mixed performance, suggesting a varied market environment:

XLC, XLY exhibit relatively neutral movements with stable volumes, not indicative of strong trend activity.
XLE, XLF depict weakness with drops alongside increased volume, indicating selling pressure possibly due to macroeconomic/sector-specific factors.
XLK showcases resilience with steady upward move and volume spike, hinting at some rotation towards technology but needs confirmation for sustained trend.
XLRE, XLU are in a bearish state, with drops coupled with volume spikes, suggesting sector exits or risk aversion.

Key Levels to Watch:

SPY:
Key support resides around 606.50 with a critical resistance near 608.50. A breach in either direction could set the tone for subsequent short-term moves.

QQQ:
Support is at the 537.50 level with resistance pegged at 539.50. Observations here, especially during volume spikes, could suggest upcoming directional moves.

Scenarios:

Bullish Scenario:
For SPY and QQQ, a bullish scenario might be driven by positive economic reports or favorable earnings surprises enhancing market confidence. A breakout above resistance levels mentioned earlier could catalyze a rally, supported by solid volume.

Bearish Scenario:
Conversely, negative economic data, worsening geopolitical tensions, or breakdowns below key support could trigger further declines. For SPY and QQQ, failing to maintain critical support alongside increased VXX could precipitate accelerated selling.

Overall Commentary:

The market currently shows signs of indecision with a lean towards bearish sentiment, notably due to increased volatility and sector weakness, especially in financials and energy. Observations around key resistance and support levels in SPY and QQQ could provide traders insight into possible short-term momentum shifts. Continued monitoring of VXX for volatility spikes will be crucial. Traders should brace for possible volatility ahead, potentially taking advantage of breakout/breakdown scenarios in the upcoming days.