Market Analysis

SPY|QQQ Thursday 1PM 8/15/2024

August 15, 2024 4 min read

Market Sentiment Analysis

Overall Market Sentiment:

SPY (S&P 500 ETF):

The recent 13 bars on the 30-minute intraday chart over the past 30 days show several noteworthy developments. In these sessions, SPY has demonstrated a steady ascent in price, consolidated with increased volume in several bars, indicating significant interest at these price levels. SPY faced slight resistance around the 552.62 level but managed to close above 551.380 in the majority of these bars. With this steady movement, the sentiment appears slightly bullish in the short term. However, we should keep watch on any volume spikes accompanied by price drops, which might indicate increased selling pressure.

QQQ (Nasdaq-100 ETF):

For QQQ, the pattern is quite similar, reflecting a general bullish sentiment. The past 13 bars have shown a series of higher highs and higher lows, culminating in a recent high at 473.990. Volume has generally been consistent with some peaks at critical price levels, which supports the bullish case. Given that QQQ has closed above 472.340 in the majority of the bars, it suggests that buyers are in control, potentially looking to push the price higher in the near term.

VXX (Volatility Index):

VXX provides an inverse view of market sentiment. Notably, VXX spiked from 44.845 to 46.30, indicating heightened volatility and some level of investor unease. This increase suggests a short-term expectation of market instability. Such spikes often precede corrections or heightened selling pressures in equity markets like SPY and QQQ. Hence, while SPY and QQQ show bullish tendencies, the VXX’s recent uptick warns of potential short-term corrections.

Sector Analysis:

Among the sector ETFs, several stand out over the past 30 days:

XLC (Communications): Minimal price movement with steady volume, indicating stability but not momentum.
XLY (Discretionary): Shows slight bullish movement recently, suggesting interest in riskier assets.
XLP (Staples): Stable prices with steady volume, typically defensive and less volatile.
XLE (Energy): A slight downtrend, reflecting weaker momentum in the energy sector.
XLF (Financials): Relatively stable, with volume reinforcing its current price levels, reflecting mixed sentiment.
XLV (Health Care): Stable with minor dips; no significant momentum, indicating stable but unexciting performance.
XLI (Industrials): Small bullish trend, notable volume spikes.
XLK (Technology): High volatility with recent upward movement, indicating positive sentiment.
XLB (Materials): Slight upward trend with consistent volume.
XLRE (Real Estate): Some volatility but limited substantial movement.
XLU (Utilities): Stable, defensive, and showing minimal significant movement.

Strong Sectors:
– Technology (XLK): High positive volatility and recent upward movement signal strong momentum.
– Discretionary (XLY): Continued mild bullish trend indicates growing investor confidence.

Weak Sectors:
– Energy (XLE): Mild downtrend reflects weaker momentum.
– Health Care (XLV): Shows stability but lacks significant momentum.

Key Levels to Watch:

SPY:

Support: 550.788 – This level has maintained lower bounds in recent sessions.
Resistance: 552.71 – Recent highs that SPY would need to break for a continued uptrend.

QQQ:

Support: 471.635 – Recent lower bounds providing a support base.
Resistance: 473.990 – Recent high and a critical level to surpass.

Scenarios:

Bullish Scenario:

For SPY and QQQ, a potential bullish scenario includes positive economic data, such as favorable employment figures or robust earnings reports from key companies. Technically, breaking above resistance levels of 552.71 (SPY) and 473.99 (QQQ) could invite more buying interest. Sector rotation into Technology and Consumer Discretionary also adds bullish bias.

Bearish Scenario:

A bearish scenario may unfold if negative economic news surfaces, like weak retail sales data or escalating geopolitical tensions. Additionally, if VXX continues to rise, indicating heightened volatility, it could lead to increased selling pressure. Technically, drops below support levels of 550.788 (SPY) and 471.635 (QQQ) would affirm near-term bearish trends.

Overall Commentary:

Currently, the market sentiment leans slightly bullish, supported by stable upward movements in SPY and QQQ. Sector analysis reinforces optimism with strength in Technology and Discretionary sectors. However, caution is warranted given the recent rise in VXX, suggesting potential volatility ahead. Traders should watch key support and resistance levels closely for informing short-term trading strategies.