Market Analysis

SPY|QQQ Tuesday 1PM 6/04/2024

June 4, 2024 3 min read

Market Sentiment Analysis

Overall Market Sentiment:

SPY (S&P 500 ETF):
The 30-minute intraday chart of SPY over the past 30 days shows an uptrend with some consolidation occurring recently. However, focusing on the last 13 bars, we observe a slight decrease in volume paired with generally stable price movements. There is a marginal upward bias due to prices predominantly remaining above the 30-day moving average, yet the reduced volume in recent sessions could indicate some hesitation among traders.

QQQ (Nasdaq-100 ETF):
Similarly, the 30-minute intraday chart of QQQ over the last 30 days has exhibited an upward trend. For the recent 13 bars, prices have been trying to push higher with consistent volume, thereby supporting the existing bullish sentiment. QQQ still trades above the 30-day moving average with some minor consolidations, reinforcing a positive outlook, although any significant downward movement could quickly alter the sentiment.

VXX (Volatility Index):
VXX has remained relatively flat in the recent 13 bars with minor fluctuations. The lack of significant spikes indicates a calm market environment with low implied volatility. This suggests a bullish or stable sentiment for both SPY and QQQ as reduced volatility typically correlates with a risk-on environment.

Sector Analysis:

Among the sector ETFs, several demonstrate noteworthy performance over the past 30 days:

XLK (Technology): Showing consistent strength, continuously trading near or at its highs.
XLC (Communication Services): Also strong, matching the broader market uptrend.
XLV (Health Care): Trading positively with gradual upward movements.
XLY (Consumer Discretionary): Stable but less aggressive compared to XLK and XLC.

Notable Sector Rotations:
– XLU (Utilities) and XLP (Consumer Staples) have been relatively weak, indicating a rotation into more growth-oriented sectors like Technology and Communication Services.
– XLE (Energy): Some volatility but generally underperforming the broader market trend.

Key Levels to Watch:

SPY:
– Support Levels: 520 and 525
– Resistance Levels: 530 and 535

QQQ:
– Support Levels: 445 and 450
– Resistance Levels: 455 and 460

Scenarios:

Bullish Scenario:
For SPY and QQQ, positive economic data (like favorable unemployment rates), strong earnings reports from major constituents, or breaking above key resistance levels at 530 (SPY) and 455 (QQQ) could drive prices higher. Lower volatility as seen in VXX supports a bullish outlook, provided it continues to trend downward.

Bearish Scenario:
A potential bearish scenario includes negative economic news (unexpected inflation spikes, disappointing job reports), geopolitical tensions, or failure at resistance levels with significant downward movements potentially leading to increased volatility as indicated by VXX. Key swing losses below 520 (SPY) and 445 (QQQ) would be critical to watch.

Overall Commentary:

The overall market sentiment remains cautiously optimistic. With SPY and QQQ trading above key moving averages, supported by low volatility in VXX, the bulls appear to have control. Sector strength in Technology and Communication Services reinforces this trend. However, caution is warranted due to the reduced volume in recent sessions which may signal potential fatigue in the upward momentum.

Charts: