Market Analysis

SPY|QQQ Wednesday 4PM 9/04/2024

September 4, 2024 3 min read

Market Sentiment Analysis

Overall Market Sentiment

SPY (S&P 500 ETF):
Based on the 30-minute intraday chart for the past 30 days, focusing particularly on the last 13 bars:
– Volume Trends: There has been a noticeable increase in volume in the most recent bars, particularly during the 15:30 and 16:00 time slots. On September 4, 2024, volume spiked significantly during the 15:30 interval, suggesting strong buying or selling interest.
– Moving Averages: Short-term moving averages appear to support a sideways trend with a slight upward bias. No clear breakout past significant moving averages, indicating consolidation at current levels.
– Price Movements: Recently, SPY experienced a slight reprieve from breaking down below $550.00 but struggled to maintain levels above $551.00, hovering around $550.55 towards the close. The oscillation around $550.50 suggests a tug-of-war between bulls and bears.

QQQ (Nasdaq-100 ETF):
– Volume Trends: QQQ displayed relatively lower volume towards the end of the trading day on September 4th, after a surge around the 15:30 interval. Notable volume spikes coincide with range-bound price action.
– Moving Averages: Short-term moving averages indicate a consolidation phase within a broader uptrend. There’s potential bullish momentum if QQQ can sustain above $460.
– Price Movements: Price movements indicate a struggle to hold levels above $462, with more support seen around $460.55. This suggests a near-term neutral to slightly bullish bias, contingent on maintaining above support levels.

VXX (Volatility Index):
– Volume Trends: A significant volume spike occurred in the 14:30 interval on Sept 4, followed by another rise in the next interval before tapering down at the close.
– Price Movements: VXX prices soared to near $55.62 during a higher volume interval before settling slightly lower. High volatility indicates increased investor concern, likely leading to cautious market sentiment for SPY and QQQ.

Sector Analysis

Examining sector ETFs:

Strong Performers:
- XLI (Industrials): Showed strength, closing higher from lows, suggesting rotation into cyclical sectors.
- XLY (Consumer Discretionary): Displayed resilient price action with volumes peaking alongside an uptick in prices.
Weak Performers:
- XLE (Energy): Fell below earlier highs indicating a bearish trend in the near term.
- XLU (Utilities): Small, steady gain but overall weak relative strength within the past 30 days.
Implications: Sector rotation suggests a cautious but optimistic outlook with a tilt towards industrials and discretionary sectors, possibly driven by anticipated economic resilience.

Key Levels to Watch

SPY:
– Support Levels: $548.00 and $545.00 (psychological and technical support)
– Resistance Levels: $551.00 and $553.00

QQQ:
– Support Levels: $459.00 and $456.00
– Resistance Levels: $462.50 and $464.00

Scenarios

Bullish Scenario:
– SPY and QQQ: A break above key resistance levels ($551 for SPY, $462.50 for QQQ) driven by positive economic data or strong earnings reports can trigger accelerated buying. Technical patterns supporting a breakout would further validate bullish sentiment.

Bearish Scenario:
– SPY and QQQ: Negative economic news or geopolitical tensions causing a break below key support levels ($548 for SPY, $459 for QQQ) can lead to amplified selling pressure and increased fear, exacerbated by technical breakdown patterns.

Overall Commentary

Current market sentiment leans towards cautious optimism with key indexes like SPY and QQQ in consolidation mode, supported by sector rotation into cyclical areas like Industrials and Consumer Discretionary. Elevated VXX levels suggest heightened sensitivity to market news but generalized risk appetite remains intact if critical support levels hold. Traders should watch for breakouts or breakdowns from current levels as potential directional confirmations.