Market Analysis

SPY|QQQ Thursday 4PM 8/22/2024

August 22, 2024 4 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 indicates a steady uptrend, with significant bullish activity in the recent 13 bars. The trading volume shows a marked increase during upward price movements, suggesting strong buying interest. The moving averages on the 30-minute chart are also trending upwards, providing additional support for a bullish sentiment. Notably, recent closing prices are near the highs of the session, indicating strong buying pressure. Volumes are peaking as prices approach new highs, a bullish signal.

QQQ (Nasdaq-100 ETF):
Similar to SPY, QQQ shows a strong uptrend over the past 30 days on the 30-minute intraday chart. Recent 13 bars reflect increased buying volumes, especially near the close, suggesting bullish momentum. The moving averages are steadily rising, and the volume spikes during price upswings offer further evidence of strong market sentiment for QQQ. The Nasdaq-100, being tech-centric, is showing resilience and robust accumulation by traders.

VXX (Volatility Index):
VXX shows a mixed sentiment with sporadic spikes, indicating occasional bouts of fear in the market. Although there are some significant spikes in VXX, representing increased volatility, overall it appears to be trending lower, implying that market participants are generally confident. A decrease in VXX traditionally signals lower market panic, supporting bullish sentiments in SPY and QQQ.

Sector Analysis

Based on the performance of the sector ETFs over the past 30 days, certain sectors stand out:

XLC (Communication Services): Steady uptrend with substantial volumes on upticks, indicating strength.
XLK (Technology): Leading the market with strong performance and heavy buying volumes, reflecting robust investor interest.
XLY (Consumer Discretionary): Displays some volatility but maintains an upward trend, suggesting consumer confidence.

Meanwhile, defensive sectors such as XLP (Consumer Staples) and XLU (Utilities) are showing moderate gains, while XLE (Energy) and XLF (Financial) are more subdued, indicating a slight sector rotation towards growth-oriented sectors.

Key Levels to Watch

SPY:
– Support: 450.00 (near-term psychological level and recent intraday low)
– Resistance: 460.00 (recent swing high)

QQQ:
– Support: 370.00 (corresponds to recent consolidation base)
– Resistance: 380.00 (near recent highs, potential breakout level)

Scenarios

Bullish Scenario:
For both SPY and QQQ, the potential for continued upward momentum exists if positive economic data is released, or if major earnings reports surpass expectations. Technical breakouts above resistance levels, supported by high volumes, would further bolster bullish scenarios. Continued lower readings in VXX would also support a risk-on environment.

Bearish Scenario:
A potential bearish scenario for SPY and QQQ could unfold if there’s adverse economic data or geopolitical tensions that disrupt market confidence. A technical breakdown below key support levels on high selling volume would indicate a shift in sentiment. An unexpected spike in VXX would also suggest increasing market fear and could trigger broader sell-offs.

Overall Commentary

The overall market sentiment appears bullish, driven by strong performances in tech and communication sectors, as evidenced by the robust movements in QQQ and certain sector ETFs like XLK and XLC. The SPY follows with solid upward momentum supported by high volumes. Key support and resistance levels will be critical to watch for future price action.

The current market environment favors a growth-oriented approach, with a noticeable sector rotation into tech and discretionary sectors. This is supported by the relatively low volatility indicated by VXX, which shows occasional spikes but generally trends lower, reflecting investor confidence. However, traders should remain cautious of potential external shocks that could influence sentiment abruptly.