Back to Insights
Market Analysis

SPY|QQQ Thursday 4PM 6/20/2024

June 20, 2024 4 min read

Market Sentiment Analysis:

Overall Market Sentiment:

SPY (S&P 500 ETF):

Analyzing the SPY on a 30-minute intraday chart for the past 30 days with a focus on the recent 13 bars (approximately 6.5 hours of trading) reveals some interesting trends.

  • Volume Trends: The volume has shown a considerable spike in the last hour of trading compared to earlier in the day. This suggests increased trading activity towards market close, which could point to positioning by institutional traders.

  • Moving Averages: SPY appears to be trading close to its short-term moving averages, possibly indicating a period of consolidation. The 13-bar EMA and 50-bar SMA are converging, suggesting a potential buildup for a breakout.

  • Notable Price Movements: Recent candles show a tight range in price movements with higher lows, indicating underlying buying pressure despite the market’s reluctance to push higher aggressively.

QQQ (Nasdaq-100 ETF):

For QQQ, the recent 13 bars also display a consolidation but with slight upward price pressure.

  • Volume Trends: Like SPY, QQQ has seen a volume spike towards the end of the trading day. However, volume is relatively steady in earlier bars, indicating consistent trading activity.

  • Moving Averages: QQQ is trading at a slight premium to its short-term EMAs, indicating a bullish bias.

  • Notable Price Movements: The last 13 bars have shown a series of higher lows and highs, which suggests accumulation ahead of a potential breakout.

VXX (Volatility Index ETF):

VXX has seen some minor fluctuations recently, with a slight increase in volume.

  • Significant Spikes or Drops: The intraday chart for VXX saw a notable spike in both price and volume in the last 13 bars. This could hint at growing investor anxiety or potential market turbulence ahead.

  • Impact on SPY and QQQ: Elevated VXX values typically correspond to increased volatility in SPY and QQQ, suggesting traders should remain cautious.

Sector Analysis:

Examining sector ETFs over the past 30 days reveals that rotation is occurring.

  • Strong Sectors:
    • XLC (Communication Services): Exhibits relatively consistent gains, suggesting strength in communication stocks.
    • XLK (Technology): Shows strength and resilience, corroborating the bullish sentiment in QQQ.
    • XLY (Consumer Discretionary): Has been performing well, benefiting from consumer spending trends.
  • Weak Sectors:
    • XLE (Energy): Despite intra-day fluctuations, it shows signs of weakness compared to other sectors.
    • XLU (Utilities): Traditionally a defensive sector, has underperformed possibly due to an overall risk-on sentiment in the market.

Key Levels to Watch:

SPY:

  • Support Levels: 545, 540
  • Resistance Levels: 550, 555

QQQ:

  • Support Levels: 478, 475
  • Resistance Levels: 485, 490

Scenarios:

Bullish Scenario:

For both SPY and QQQ, a bullish scenario would see:

  • Positive economic data releases, such as stronger than expected GDP growth or employment figures.
  • Earnings beats from major index components.
  • A clean technical breakout above key resistance levels with volume backing the move.
  • For SPY, sustained trade above 550; for QQQ, above 485.

Bearish Scenario:

Conversely, a bearish outlook would feature:

  • Negative economic news, such as increased unemployment claims or slowing manufacturing data.
  • Geopolitical tensions escalating, particularly any new tariffs or sanctions.
  • Technical breakdown below key support levels, especially with increasing volume.
  • For SPY, a drop below 545; for QQQ, below 478.

Overall Commentary:

The market sentiment appears cautiously optimistic with a tilt towards bullish for the short term. SPY and QQQ are both showing consolidative behavior with bullish undertones, supported by sector strength in technology and consumer discretionary. However, the rise in VXX suggests traders should remain vigilant for potential volatility.

The leading sectors can provide strong signals for near-term opportunities, particularly in XLC and XLK. Watch key levels closely for confirmation of market direction—both in breakout and breakdown scenarios. This is a pivotal period for swing traders as market indicators and sector rotations bear close watching.

Charts:

Support your analysis with the following charts from Finviz:

Share:

Related Posts