Market Analysis

SPY|QQQ Tuesday 4PM 6/25/2024

June 25, 2024 3 min read

Market Sentiment Analysis

Overall Market Sentiment:

SPY (S&P 500 ETF):
Over the past 30 days, SPY has shown a consistent upward trend on the 30-minute intraday chart. In the most recent 13 bars, there have been significant signs of accumulation with a noticeable increase in volume during upward price movements. The 50-period moving average is trending above the 200-period moving average, indicating a bullish sentiment. However, the last few bars show some consolidation around the recent highs, suggesting a potential pause or a minor pullback before making another leg up.

QQQ (Nasdaq-100 ETF):
QQQ has mirrored SPY’s bullish trend with a steady upward trajectory over the 30-minute chart for the past 30 days. The recent 13 bars indicate a strong buying activity with significant volume spikes on upward moves, especially in the afternoon sessions. Similar to SPY, QQQ’s 50-period moving average is well above the 200-period moving average, reinforcing the bullish sentiment. There is a consolidation phase towards the end, similar to SPY, which could indicate a brief pause before continuation.

VXX (Volatility Index):
VXX has shown a notable decline over the past 30 days, reflecting the decreasing volatility and increasing investor confidence in the market. There is no significant spike in recent bars, suggesting a stable and low volatility environment. The downward trend in VXX complements the bullish sentiment seen in SPY and QQQ, indicating a low fear factor among investors.

Sector Analysis:

Strong Sectors:

XLC (Communication Services): Showed strong performance with higher highs and increased volume near the peaks, indicating sector strength.
XLK (Technology): Exhibited strong momentum, reflecting the overall bullish sentiment in QQQ. High volume during upward price movements supports positive investor sentiment.
XLI (Industrials): Has maintained an upward trend with consistent volume, indicating a steady sector.
XLV (Health Care): Although not as strong as Technology and Communication Services, it shows a consistent uptrend with moderate volume.

Noticeable Sector Rotation:
– XLE (Energy): Displayed a strong end to its recent weakness, indicating a potential rotation into Energy stocks.
– XLF (Financials): Lagging compared to other sectors but showing signs of stabilization, which could imply a rotation back into Financials if the broader market continues to rally.

Key Levels to Watch:

SPY:
– Support Levels: 540, 535
– Resistance Levels: 550, 555

QQQ:
– Support Levels: 475, 470
– Resistance Levels: 480, 485

Scenarios:

Bullish Scenario:
For SPY and QQQ, a bullish scenario would involve positive economic data, strong earnings reports from major companies, and technical breakout patterns above the recent consolidation levels. A sustained increase in volume on upward movements would further confirm bullish momentum, potentially driving SPY above 550 and QQQ above 485.

Bearish Scenario:
A bearish scenario could unfold if there is negative economic news, heightened geopolitical tensions, or a technical breakdown below key support levels. For SPY, a break below 540 with increasing volume could indicate a further drop to the 535 support level. Similarly, for QQQ, a break below 475 could trigger a move down to 470.

Overall Commentary:

The overall market sentiment remains bullish, with SPY and QQQ showing strong upward trends on their respective intraday charts. The decreasing volatility as indicated by VXX further supports a low-risk environment conducive to upward market movements. Sector analysis highlights strengths in Technology and Communication Services, with potential rotation into Energy and Financials. Key levels for SPY and QQQ are crucial to monitor, as a break above or below these levels could dictate the next market direction. Traders should stay vigilant for any economic or geopolitical news that might impact the market dynamics in the coming days.