SPY|QQQ Wednesday 1PM 1/21/2026

Market Sentiment Analysis:

1. Overall Market Sentiment:

• SPY (S&P 500 ETF):
  Over the recent 13 bars on the 30-minute chart, SPY showed a consolidation phase between 678 and 684. A noticeable drop occurred in the bar with high volume of 9.75 million compared to the average, indicating selling pressure. The moving averages would likely be flattening. This suggests a neutral to slightly bearish sentiment in the immediate term, with strong support around 678.

• QQQ (Nasdaq-100 ETF):
  QQQ mirrors SPY’s behavior with a clear drop from the 616 level to around 610, where it found some stability. The high volume sell-off, followed by lighter volume buying, suggests a cautious sentiment, with traders apprehensive about upward moves. The sentiment is neutral with potential downside risk.

• VXX (Volatility Index ETF):
  VXX shows increased volatility with a spike earlier in the rows provided, moving from 27.46 to highs of 28.57 and then settling at 27.975. This reflects heightened market stress that could correlate with the sell-off in SPY and QQQ, indicating investor anxiety and a bearish tilt in sentiment.

1. Sector Analysis:

   A review of different sector ETFs reveals sector-specific trends:

• XLC, XLY, XLK (Communication, Consumer Discretionary, Technology): Generally show consolidation after recent sell-off, likely following broad index behavior.
• XLP, XLU (Staples, Utilities): Display resilience and stability, often acting as safe havens during market stress, suggesting a shift to defensive positions.
• XLF, XLI (Financials, Industrials): Show pressure but with some degree of stability.

• XLE (Energy): Also consolidating, potentially eyeing global macro cues for direction.

  The implication is a defensive rotation as investors seek safety amid uncertainty.

1. Key Levels to Watch:

• SPY:

  • Support: Near-term support is seen around 678-680, crucial in avoiding further decline.
  • Resistance: 684 marks a resistance level; a break above may suggest renewed momentum.
• QQQ:
  • Support: Critical support around 610, a break below could see accelerated selling.
  • Resistance: Resistance near 616; crossing above may attract buying interest again.

1. Scenarios:

• Bullish Scenario:
  • SPY and QQQ: A potential rally could be driven by easing interest rate pressures or favorable economic data like strong employment numbers. Technical breakouts above 684 for SPY and 616 for QQQ could target higher levels, potentially triggering shorts to cover.
• Bearish Scenario:
  • SPY and QQQ: Further economic uncertainties or worsening geopolitical tensions could drive markets lower. Technical breakdowns below 678 for SPY and 610 for QQQ would increase bearish momentum, targeting lower supports.

1. Overall Commentary:

   The market currently reflects a cautious stance, with defensive sectors seeing favor. Economic outlooks remain pivotal, and volatility indicators like VXX suggest underlying investor anxiety. Key levels in SPY and QQQ must be watched closely for signs of either a reversal or continuation of current trends. Traders should be prepared for both breakouts and breakdowns, given current volatility measures.

2. Charts:

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In conclusion, the market is standing at a potential turning point, with participants closely monitoring macroeconomic signals and sector-specific rotations. Momentum traders need to carefully assess sentiment indicators and key technical levels for optimal entries and exits.