Market Analysis

SPY|QQQ Monday 4PM 8/12/2024

August 12, 2024 4 min read

Market Sentiment Analysis

Overall Market Sentiment:

SPY (S&P 500 ETF):
On examining the 30-minute intraday chart for the past 30 days, a few notable observations can be made. The recent 13 bars show the following trends:

Volume: Increased volume was noticeable in the last hour of trading on the recent day, suggesting higher trading activity and possibly an increase in investor interest.
Moving Averages: SPY has been hovering around its short-term moving averages. The price action has been mildly bullish but lacked strong conviction.
Price Movements: Recent price bars indicate minor fluctuations with quick retractions, indicating possible indecision among traders. The close prices are consistently within a tight range, around 533.20 to 532.63.

QQQ (Nasdaq-100 ETF):
Similarly, QQQ’s last 13 bars reflect:

Volume: The spike in volume toward the last 30 minutes suggests heightened activity.
Moving Averages: QQQ maintains levels around its short-term moving averages, with slight upward momentum observed.
Price Movements: Noticeable dips and quick recoveries point to buying interest. The price action indicates that traders are cautious but are willing to buy on dips. The close prices ranging from 451.50 to 450.93 show a slightly higher level of support around the 451 mark.

VXX (Volatility Index):
– Volume: Notice premature spikes and higher volatility, especially around 15:30 with the highest volume recorded.
– Price Movements: Volatility showed some significant upward spikes, indicating a jump in market fears or hedging activities.
– Impact: A higher VXX signals that investors are somewhat apprehensive about market conditions, potentially influencing both SPY and QQQ to experience higher volatility in upcoming sessions.

Sector Analysis:

Key observations from sector ETFs:

Leaders: XLE (Energy) and XLRE (Real Estate) have shown strong performance, with notable volumes and consistent upward ticks. XLE’s higher close prices (ending at 89.96) and XLRE indicating strong momentum (ending at 41.56) suggest sector strength.
Laggards: XLY (Consumer Discretionary) and XLP (Consumer Staples) showed more neutral to bearish sentiment, with price actions indicating small indecisive movements. XLY hovered around the 173.65 mark without showing strong directional movement.
Notables:
- XLV (Health Care) and XLK (Technology) have maintained solid spots with consistent upward ticks, highlighting investor interest despite broader economic concerns. We’d observe XLV closing at 149.41 and XLK at 207.27.
Rotation: Slight rotation into defensive sectors like XLU (Utilities), closing at 73.74, suggests cautious optimism, reflecting a mixed sentiment with a leaning toward stability.

Key Levels to Watch:

SPY:
– Support: 532.00 (strong psychological level, tested multiple times)
– Resistance: 534.00 (recent highs and congestion levels)

QQQ:
– Support: 450.00 (key psychological level and recent rebound point)
– Resistance: 452.00 (upper range of recent trading activity)

Scenarios:

Bullish Scenario:
– SPY: Potential breakout above 534, driven by better-than-expected economic data or strong earnings reports. Watch for higher volume around this level, indicating conviction.
– QQQ: A move above 452 could signal a continued rally, with drivers such as positive tech sector news or stabilization in bond yields supporting tech valuations.

Bearish Scenario:
– SPY: A fall below 532 could trigger further selling, particularly if exacerbated by negative economic reports or geopolitical tensions.
– QQQ: Dropping below 450, combined with bearish market breadth and news, could usher in more selling pressure and quick volatilities.

Overall Commentary:

The market presently shows a cautious stance with mixed signals from sector performance and ETF moves. While volatility seems to be picking up (noted from VXX), certain sectors like Energy, Real Estate, and Utilities show strength indicating some defensive positioning. Key levels for SPY and QQQ will bear watching closely, as the tug between bullish optimism and bearish caution is ongoing. Should critical resistance levels be broken, traders can anticipate a more directional move, reinforced by volume patterns and external economic drivers.