Market Analysis

SPY|QQQ Tuesday 4PM 9/10/2024

September 10, 2024 4 min read

Market Sentiment Analysis:

Overall Market Sentiment:

SPY (S&P 500 ETF):
The SPY’s 30-minute intraday chart exhibits a strong uptrend over the past 30 days. Considering the recent 13 bars (approximately 6.5 trading hours), there has been notable bullish movement with higher highs and higher lows. Volume has shown significant spikes during uptrends, confirming buying interest. The moving averages on the shorter time frame would likely be pointing upwards, suggesting momentum. Notably, the candlesticks indicate a consolidation near the highs between $548 and $549, suggesting a potential breakout building.

QQQ (Nasdaq-100 ETF):
QQQ has displayed a similar bullish pattern as SPY, reinforcing that tech-heavy stocks are enjoying momentum. The recent 13 bars indicate steady upward movement, with resistance seen around $459. Higher volume comes in during price rises, supporting the bullish sentiment. The closing prices have stayed within tight ranges near recent highs, suggesting a potential bullish breakout.

VXX (Volatility Index):
The recent behavior of VXX shows a downtrend, evident from the lower highs and lower lows. A decrease in volatility aligns with rising stock indices (SPY and QQQ). Notable drops in VXX signal a risk-on environment, suggesting investors are confident and less fearful. The impact is positive for SPY and QQQ, as lower volatility typically accompanies bullish market sentiment.

Sector Analysis:

Strong Performing Sectors:
– XLY (Consumer Discretionary): XLY has performed well, with consistent uptrend and strong volume in the past 30 days, indicating consumer confidence and spending.
– XLK (Technology): Tech stocks (XLK) show considerable strength, often leading the market. The upward movement and volume support a bullish view.
– XLE (Energy): Energy stocks have also shown strength, with recent support at higher price levels suggesting bullish sentiment in this sector.

Noticeable Sector Rotation:
– XLU (Utilities): Utilities have lagged, which is typical in a risk-on environment as investors move into higher beta stocks.
– XLRE (Real Estate): Real Estate ETFs have shown some strength but not as pronounced as tech and consumer discretionary.

Key Levels to Watch:

SPY:
– Support: Near-term support around $547.00, and a stronger support level at $545.50.
– Resistance: Key resistance at $550.00, which, if broken, could lead to a significant upside swing.

QQQ:
– Support: Immediate support around $457.00, with major support levels at $455.00.
– Resistance: Short-term resistance at $460.00. A break above this level could see QQQ rallying further.

Scenarios:

Bullish Scenario:
– SPY & QQQ: A continuation of uptrend fueled by positive economic data, such as stronger-than-expected GDP growth or employment figures. Strong earnings reports from major tech companies could propel QQQ higher. A breakout above mentioned resistance levels ($550/SPY; $460/QQQ) with increased volume would affirm the bullish momentum.

Bearish Scenario:
– SPY & QQQ: Negative economic data or geopolitical tensions could reverse the current trend. A break below key support levels ($545.50/SPY; $455/QQQ) accompanied by increased selling volume could indicate a bearish shift. Rising VXX levels would also suggest increasing market fear and potential downturn.

Overall Commentary:

The overall market sentiment is bullish, driven primarily by strong performances in technology, consumer discretionary, and energy sectors. The recent lower volatility (VXX) supports a risk-on attitude amongst investors. Key support and resistance levels should be closely monitored to confirm the market’s direction. Traders should be ready for both scenarios, positioning themselves accordingly based on how SPY and QQQ react at these levels.