Market Analysis

SPY|QQQ Wednesday 8AM 8/28/2024

August 28, 2024 3 min read

Market Sentiment Analysis

Overall Market Sentiment:

SPY (S&P 500 ETF):
Over the past 30-minute intraday chart, SPY has shown some volatile movements with noticeable price and volume developments in the recent 13 bars. Specifically:
– Recent Movements: The recent data indicates a slight downward trend as seen from the high of $562.08 to the low of $560.84. The recent close at $560.90 is lower than the early periods.
– Volume Trends: Volume spiked significantly during key downward price movements, notably with 31,829 and 31,561 units, which suggest eager selling by market participants.
– Moving Averages: The 13-bar moving average may soon cross below longer-term averages, suggesting bearish momentum accumulating.

QQQ (Nasdaq-100 ETF):
Similarly, the QQQ exhibits some concerning trends:
– Recent Movements: A downward trajectory exists, from the high of $477.45 to a nadir of $475.85 before closing at $477.117, showing a recovery.
– Volume Trends: Higher volumes, 41,066 and 76,791 during declines, indicate those selling pressures are met eagerly by buyers at lowers prices.
– Moving Averages: Expect shorter moving averages to encounter resistance with the longer duration, predicting potential further declines if economic sentiment doesn’t substantially improve.

VXX (Volatility Index):
The analysis of the VXX highlights burgeoning market volatility:
– Recent Movements: The price ascending from $44.76 to $45.31, reflects increasing fear and hedging activity.
– Volume Trends: Volumes inflated significantly particularly around upward price spikes, signaling increasing investor concern of instability.
– Impact on SPY and QQQ: Elevated VXX generally correlates with increased SPY and QQQ pessimism.

Sector Analysis:

By appraising sector performance:
– Strengthening Sectors:
– Technology (XLK): Limited data but suggesting resilience given low volatility in after-hours.
– Communications (XLC): Consistent trading volumes, maintaining steady performance.
– Utilities (XLU): Shows stability, typical in turbulent times as a safe-haven investment.

Weakening Sectors:
- Financials (XLF): Underperformance and consistent low volumes are indicative of caution among investors.
- Energy (XLE): Little positive movement, alongside minor trading volumes reflects weaker investor interest.
- Real Estate (XLRE): Shows lackluster performance, expected given rising bond yields.

Key Levels to Watch:

SPY:
– Support Levels: $561.00 and $560.00.
– Resistance Levels: $562.00 and $563.20.

QQQ:
– Support Levels: $476.00 and $475.50.
– Resistance Levels: $477.50 and $478.20.

Scenarios:

Bullish Scenario:
– For SPY to resume bullishness, a breakout above $563.20 sustaining positive trajectories supported by strong earnings and favorable economic data.
– For QQQ, a sustained move above $478.20 driven by robust tech earnings or significant bullish reversals.

Bearish Scenario:
– For SPY, a breach below $561.00, accelerated by negative economic surprises or geopolitical unrest.
– For QQQ, further declines below $476.00 amid weak tech news or further jittery investor sentiment.

Overall Commentary:

The market faces headwinds with sustained bearish undertones visible in the SPY and QQQ’s recent performances. Rising investor anxiety as noted by the VXX is reflective of a cautious market sentiment. Sectors like Technology and Utilities show some stability, acting as safe havens among the broader spectrum of financial assets. With key support and resistance levels on the cusp of being tested, keeping a keen eye on these indicators will be crucial for short-term trading movements. As a momentum swing trader, remaining nimble and adapting to quick shifts with these signals will be paramount.