Market Analysis

SPY|QQQ Monday 8AM 7/29/2024

July 29, 2024 3 min read

Market Sentiment Analysis

Overall Market Sentiment

SPY (S&P 500 ETF):
The 30-minute intraday chart for SPY over the past 30 days shows a mixed sentiment with a recent tilt towards bullishness. Over the last 13 bars (30-minute intervals), there has been a notable increase in buying volume, suggesting a potential shift in momentum towards the bulls. Specifically, SPY managed to test a minor dip and has since been trading higher, overcoming immediate resistance levels. The moving averages are catching up, with a short-term MA potentially crossing above a longer-term MA soon—a bullish sign.

QQQ (Nasdaq-100 ETF):
Similarly, QQQ also exhibits a slightly bullish bias recently. The past 13 bars show a consistent upward movement supported by healthy volume. The moving averages are pointing upwards, and price action has breached previous highs, indicating continued buying interest. Notable price movements in heavyweight tech stocks likely contribute to this bullish momentum.

VXX (Volatility Index):
Recent VXX data suggests reduced volatility as VXX has dropped from its previous intraday highs. Its current level of 46.31 indicates an underlying calm in market sentiment, typically a bullish sign for both SPY and QQQ. However, any unexpected spikes in VXX could signal rising fear and potential market pullback.

Sector Analysis:

When analyzing the sector ETFs:

Strong Sectors:
- XLC (Communication Services): Shows steady growth with recent highs maintaining support, indicating sector strength.
- XLY (Consumer Discretionary): Significant upward movement with volume support, suggesting strong consumer spending.
- XLK (Technology): Consistent bullish trend, aligning with the overall bullish sentiment in QQQ.
Weak Sectors:
- XLRE (Real Estate): Shows stagnation, with limited volume and price action movement.
- XLU (Utilities): Recent data shows steady but unexciting performance, usually a defensive play rather than a growth area.

Sector rotation appears to favor growth and cyclical sectors over defensive ones, indicating investor confidence in economic strength.

Key Levels to Watch:

SPY:
– Support Levels:
– Short-term: 546.60
– Intermediate-term: 545.30
– Resistance Levels:
– Short-term: 547.00
– Intermediate-term: 548.20

QQQ:
– Support Levels:
– Short-term: 465.70
– Intermediate-term: 464.40
– Resistance Levels:
– Short-term: 466.50
– Intermediate-term: 468.00

Scenarios:

Bullish Scenario:
For SPY and QQQ, a continued rise above current resistance levels could be propelled by positive earnings reports, strong economic data (e.g., GDP growth, employment data), and technical breakouts. The moving averages crossing over would reinforce this bullish sentiment, likely driving SPY towards 548 and QQQ towards 468 in the near term.

Bearish Scenario:
Conversely, if we encounter negative economic news, such as worse-than-expected GDP figures or an uptick in unemployment, geopolitical tensions, or unexpected spikes in VXX, SPY might test its support at 545.30 and potentially drop further. QQQ could see a similar fate, moving down to test support at 464.40, with further downward pressure leading to more aggressive selling.

Overall Commentary:

The current market environment reflects a cautiously optimistic sentiment with bullish overtones, as observed in SPY and QQQ. Sector rotation into growth and discretionary sectors complements the overall narrative of economic recovery and expansion. Key levels on SPY and QQQ need monitoring, especially as macroeconomic data rolls out. Traders should be prepared for potential volatility spikes as the markets digest new information, but the current momentum suggests opportunities for short-term gains.