Market Analysis

SPY|QQQ Wednesday 8AM 6/12/2024

June 12, 2024 4 min read

Market Sentiment Analysis

Overall Market Sentiment:

SPY (S&P 500 ETF):
The SPY has shown mixed sentiment over the past 30 days when examining the 30-minute intraday chart, but the recent 13 bars have been more telling. Key observations:
– Volume Trends: The last 13 bars show an overall decrease in volume, indicating lower trading activity, which may signify a potential consolidation phase.
– Moving Averages: If we consider the 50 and 200 SMA (Simple Moving Averages), the price seems to oscillate around these levels, reflecting indecisiveness among traders.
– Notable Price Movements: The SPY shows slight upward movement with intermittent pullbacks, suggesting cautious optimism. Particularly, recent higher closes relative to opens signal a near-term bullish sentiment.

QQQ (Nasdaq-100 ETF):
For QQQ, the sentiment seems cautiously bullish as well:
– Volume Trends: The recent 13 bars maintained relatively higher volumes, which indicates stronger trader engagement compared to SPY.
– Moving Averages: Similar to SPY, price fluctuation around short-term SMAs may suggest a consolidating trend but with a slight upward bias.
– Notable Price Movements: QQQ recorded higher highs and higher lows over the recent 13 bars, reinforcing a bullish short-term momentum.

VXX (Volatility Index):
– Significant Spikes or Drops: VXX has been relatively stable with minor fluctuations in the recent periods. No significant spikes suggest subdued market fear.
– Impact on SPY and QQQ: The muted volatility reflects a market environment not driven by strong panic or euphoria. This stability supports the current slow but upward movements in SPY and QQQ.

Sector Analysis:

Strong Sectors:
– XLY (Consumer Discretionary): Shows robust movements with increased volumes, signaling sector strength.
– XLK (Technology): Continues to show bullish tendencies with low volatility and steady upward movement.

Weak Sectors:
– XLE (Energy): Although stable, it lacks the active trading volumes seen in bullish sectors, indicating less trader interest or sector rotation away from energy.
– XLU (Utilities): Demonstrates minimal price movement and volume, suggesting defensive posturing rather than aggressive growth expectations.

Sector Rotation:
There’s clear sector rotation into technology and consumer discretionary, reflecting investor optimism in these sectors and perhaps a retreat from traditionally defensive sectors such as utilities and energy.

Key Levels to Watch:

SPY:
– Support Levels: Immediate support around 535, given recent price consolidation points.
– Resistance Levels: Next resistance at 540, a psychological level and recent high.

QQQ:
– Support Levels: Immediate support at 465, a point tested multiple times recently.
– Resistance Levels: Resistance around 470 and 471.5 reflecting prior peaks.

Scenarios:

Bullish Scenario:
– SPY and QQQ: Continued positive economic data, especially strong earnings reports from technology and discretionary sectors. Key technical breakout would be sustained closes above 540 for SPY and 470 for QQQ. Support from low VXX supports a tranquil market allowing upward movements.

Bearish Scenario:
– SPY and QQQ: Weak economic data or emerging geopolitical tensions could cause breakdowns. For SPY, breaking below 535 may indicate further downturn risk. For QQQ, a drop below 465 would be concerning. An unexpected rise in VXX could also destabilize the market sentiment.

Overall Commentary:

Overall, the market sentiment remains cautiously bullish, especially with technology and consumer discretionary sectors showing strength. With support levels being tested and not broken, and with low volatility as indicated by a subdued VXX, traders could see a continuation of the slow upward momentum. A close watch on economic data releases and earnings reports will be crucial in the coming days. Defensive rotation trends should be monitored as they might signal sentiment changes.