Market Analysis

SPY|QQQ Tuesday 8AM 7/30/2024

July 30, 2024 4 min read

Market Sentiment Analysis

Overall Market Sentiment:

SPY (S&P 500 ETF):

Analyzing the 30-minute intraday chart of SPY over the past 30 days with a focus on the last 13 bars of price and volume:

Over the last 13 bars, SPY has shown slight price fluctuations with relatively stable closes, suggesting a consolidation phase.
There was a noticeable spike in volume during the session where the price tested the lows around $544.00, indicating potential institutional interest or stop-loss hunting.
Moving averages: If we consider a short-term moving average (e.g., 9-period) and compare it with a longer-term average (e.g., 21-period), there appears to be a convergence, implying a possible trend change or continuation of the sideways movement.
Notable price movements: The highs around $546.18 and the lows approximately at $544.00 can be seen as recent resistance and support levels, respectively.

QQQ (Nasdaq-100 ETF):

Analyzing the 30-minute intraday chart of QQQ over the past 30 days with a focus on the last 13 bars of price and volume:

QQQ has shown steady upward movement with consistent higher highs and higher lows within the last 13 bars.
Volume analysis indicates increased activity at higher price levels, suggesting accumulation rather than distribution.
Moving averages: The short-term moving average has crossed above the longer-term moving average, signaling bullish momentum.
Notable price movements: The strong resistance level was observed around $465.59 while recent support levels are found near $464.32. Breaking either of these could lead to significant moves.

VXX (Volatility Index):

Examining VXX for market volatility and investor sentiment:

VXX has been relatively stable with slight downward pressure, reflecting a muted volatility environment.
No significant spikes were observed in the recent trading bars, indicating that investors are not yet fearful of major market disruptions.
A drop in VXX supports the bullish sentiment in SPY and QQQ, as it suggests reduced demand for hedges against volatility.

Sector Analysis:

Performance of Sector ETFs (last 30 days):

XLC (Communication Services): Some retracement but relatively stable.
XLY (Consumer Discretionary): Showing positive momentum, nearing resistance levels.
XLP (Consumer Staples): Slight downward trend, facing resistance.
XLE (Energy): Minor movements, energy sector appears neutral.
XLF (Financials): Holding steady, minor uptrend observed.
XLV (Health Care): Sideways movements, indicating indecision in this sector.
XLI (Industrials): Slight uptrend, showing stronger performance compared to other sectors like Utilities or Real Estate.
XLK (Technology): Strong upward trend, leading the market.
XLB (Materials): Stable with minor uptrends.
XLRE (Real Estate): Experiencing some upward momentum.
XLU (Utilities): Defensive sector, negligible change.

Key Levels to Watch:

SPY:

Support: $544.00
Resistance: $546.18
Critical Levels: A break below $544.00 could lead to a test of lower levels, while surpassing $546.18 might signal further bullishness.

QQQ:

Support: $464.32
Resistance: $465.59
Critical Levels: Monitoring a break above $465.59 for bullish continuation and below $464.32 for potential downside.

Scenarios:

Bullish Scenario:

For SPY and QQQ, positive economic data such as stronger-than-expected jobs reports or impressive earnings results from major companies can lift market sentiment.
Technical breakouts above the mentioned resistance levels ($546.18 for SPY, $465.59 for QQQ) could attract more buyers, pushing prices higher.
Stable or decreasing VXX would support the bullish scenario due to lack of fear-driven selling.

Bearish Scenario:

Negative economic indicators like a disappointing GDP report or rising unemployment could pressure the indices.
Geopolitical tensions or unexpected negative corporate news could act as catalysts to push SPY below $544.00 and QQQ below $464.32.
Rising VXX would amplify the bearish sentiment, indicating increasing investor fear.

Overall Commentary:

The broader market reflected by SPY shows consolidation with a slight bullish bias in the near term, supported by volume analysis and moving averages. QQQ is showing stronger momentum compared to SPY, backed by tech sector strength. Volatility, as represented by VXX, remains subdued, suggesting a lack of immediate fear.

Sector rotation into technology and consumer discretionary indicates a risk-on environment, but defensive sectors like Utilities remain flat, reflecting cautious optimism.

Traders should watch the key support and resistance levels closely, alongside monitoring sector-specific news and broader economic indicators. The market is at a critical juncture where strong positive news can drive prices higher, but any significant negative development can quickly shift sentiment to the downside.