Key QQQ, SPY Levels to Watch in 2022

The equity’s Jan. 4 all-time high fell shy of a key level off the October 2020 bottom

Managing Editor
Jan 21, 2022 at 10:03 AM
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In the first trading week of 2022, Schaeffer’s founder and CEO Bernie Schaeffer found the refusal of the CBOE Market Volatility Index (VIX) and its associated exchange-traded notes (ETN’s) to throw anything resembling a tantrum over the negative start to 2022 (overlaid with Fed talk) to be of some interest. In turn, he constructed a table of key levels for SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust Series 1 (QQQ) on their weekly charts below, as well as gather several data points and markers of key levels to watch.

What become most notable for the SPY was that the equity’s Jan. 4 all-time high fell shy of a key level off the October 2020 bottom. SPY then closed on Jan. 7 below a key level off the October 2021 low. That same level runs in-line with the 50-day moving average, as seen in the chart below.


Meanwhile, looking at the QQQ you will find that the peak of $408.71 was captured on Nov. 22, and since then there have been just five closes above $400 for the security. Now, the tech-heavy trust is down 5% year-to-date amid the tech sector selloff, while the SPY boasts a less-severe 2% deficit so far for 2022. On Friday, Jan. 7, QQQ closed below the $380 level, which is around 5 points shy of a key October 2021 bottom, as well as the 80-day trendline. Also worth noting, the Jan. 7 close at the time marked only the second settlement below the 80-day moving average since Oct. 13.


While in neither case is there what Bernie Schaeffer would call a "technical breakdown operative" at this point, there are some red flags that can be waved. This is especially in the case of the QQQ, as an additional 3.3% decline would produce a full 10% correction off peak levels.

Subscribers to Chart of the Week received this commentary on Sunday, January 16.


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