Market Analysis

SPY|QQQ Tuesday 4PM 9/03/2024

September 3, 2024 3 min read

Market Sentiment Analysis:

Overall Market Sentiment:

SPY (S&P 500 ETF):
– Recent 13 Bars Analysis (30-Min Chart):
– Price Movement: SPY has shown a slight downward trend in the recent 13 bars, with noticeable sell-offs. The close values have been lower, reaching a recent intraday low of $551.24.
– Volume Trends: There was a significant volume spike in the 15:30 bar, indicative of increased selling pressure.
– Moving Averages: If we observed some moving averages like 20/50 period EMA, they would likely show a mild bearish crossover as prices have been moving lower recently.

QQQ (Nasdaq-100 ETF):
– Recent 13 Bars Analysis (30-Min Chart):
– Price Movement: Similar to SPY, QQQ has been showing signs of weakness. Notably, the price dropped sharply in the 15:30 bar to $461.84 before slightly recovering.
– Volume Trends: A considerable spike in volume in the 15:30 bar indicates a possible liquidation or strong resistance at higher levels.
– Moving Averages: Possible bearish crossover between shorter-term and longer-term EMAs, reflecting short-term bearishness.

VXX (Volatility Index ETF):
– Significant Spikes/Drops:
– Price Movement: VXX saw a significant rise, hitting a high of $55.20 and closing at $53.7797, indicating increasing uncertainty and fear. This spike suggests increasing market volatility and potential risk-off sentiment.
– Volume Trends: There is substantial volume in the 15:30 bar, supporting the price rise; investors are hedging more against risk.

Sector Analysis:

Strong Sectors:
- XLE (Energy): Maintained a relatively stable price ($89.22 to $89.20) with consistent volume, indicating strong support.
- XLP (Consumer Staples): Showed resilience with minor fluctuations, closing at a higher price.
Weak Sectors:
- XLK (Technology): Showed weakness as seen in QQQ with price declines and higher volumes, suggesting funds are rotating out.
- XLY (Consumer Discretionary): Decreased significantly, indicating reduced confidence in consumer spending.

Key Levels to Watch:

SPY:
– Support Levels:
– $552.00 (Immediate)
– $550.00 (Major)
– Resistance Levels:
– $554.50 (Immediate)
– $556.00 (Major)

QQQ:
– Support Levels:
– $460.50 (Immediate)
– $458.00 (Major)
– Resistance Levels:
– $464.00 (Immediate)
– $466.00 (Major)

Scenarios:

Bullish Scenario:
– SPY and QQQ:
– Key Drivers: Positive economic data or strong jobs report, favorable earnings surprises, breakthrough in geopolitical tensions, or bullish technical patterns like price closing above immediate resistance levels.
– Impact: This could push SPY above $554.50 and QQQ above $464.00, possibly initiating new upward momentum with potential for a sustained rally.

Bearish Scenario:
– SPY and QQQ:
– Key Drivers: Negative economic news (e.g., poor jobs report), worsened geopolitical tensions, a significant earnings miss, or technical breakdowns.
– Impact: This could drive SPY below $552.00 and QQQ below $460.50, leading to a broader market sell-off or correction.

Overall Commentary:

The overall market sentiment appears cautiously bearish in the short term, indicated by mounting volatility (VXX) and sector rotations out of growth sectors like Technology (XLK) into defensive ones. Investors seem to be preparing for potential downturns, reflected in the increase in VXX and volume spikes during significant price drops in SPY and QQQ.

While Energy (XLE) and Consumer Staples (XLP) are showing relative strength, typical of defensive positioning, the broader market’s slight bearish sentiment is highlighted by the declining prices in SPY and QQQ alongside increasing volatility. Traders should keep an eye on key support and resistance levels and monitor economic news closely to navigate the next moves effectively.