SPY and QQQ Support and Resistance levels
I usually do not pay too much attention to support and resistance levels. In fact, this may be the first time I am specifically writing about it. The current market situation is appropriate for the study as the markets could just be meandering sideways. Let us see.
SPY chart
I purposefully only have the support/resistance lines and the 150-day moving average plotted above. I could have tried and drawn several channels, but I think they would have been meaningless. There are 2 observations:
The 150-day moving average (automated plot) is curling on the wrong side (curling down again) and I do not like that.
The price is hovering around the bottom support/resistance lines (the white horizontal lines). Although, the price did close above the last but one white line, it has not meaningfully gone above that.
Note that the price did cross over its 10-day moving average today. However, overall, I feel the risk remains to the downside. I need to see another up day (tomorrow) to sense that we are reversing trend to the bullish side. I am still holidng my small short position in SPY.
QQQ chart
The QQQ chart looks similar to the SPY but the levels are vastly different. We can see that the price is well above the last but one white line (that forms support now) and we are actually closer to hitting the resistance line above. The 150-day moving average is curling downwards though. So, that is a divergent indicator to the bullish price trending.
I did go long the QQQ using call options this morning when it was trading lower. But took the trade off (sold the position) as I did not like the overall price action. It has been doing better than the rest of the market and there is a chance that it catches up below to the market’s levels.
In other words, at this time I do not expect the rest of the markets to catch up to the QQQ. I expect the QQQ to go lower and stabilize with the rest of the market levels. That may change in the next day or so though as the markets are closer to the oversold levels (not completely there though).
There is a lot of talk about the upcoming Fed decision whether, given the banking situation, they will pause or raise the rates by 25bps. I really do not think the actual decision matters. What matters more is the guidance or the indication of guidance around what’s next.
Note that the issues related to the banking sector are not resolved yet (in my opinion). I reduced my shorts in KRE but am still positioned for KRE to go to the downside. And there is a chance that it takes the markets down as well.
So, overall, it is obvious that I am still leaning bearish and positioned accordingly.