Scott goes over the $SPY and $QQQ Levels we are watching at at StockMarketMentor – June 14, 2022


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This is Scott with your Chart of the Day. I want to take a look at the SPY ( NYSEARCA: SPY ) and the QQQ ( NASDAQ: QQQ ). As we know we are all kind of waiting for the Federal Reserve, what are they going to do with interest rates this time around? Is it going to be 75 points? Is it going to be 50 points?

We are all kind of waiting, and the market, generally, has been rough, it’s been bad all year. It’s been a great kind of a day trading market or a 59-minute trading market, as Dan Fitzpatrick calls it. Swing trading you have got to kind of wait for your pitch. And so as a swing trader that is kind of what I am doing. I am looking for a nice strong upside reversal coming on higher than average volume.

Now, in terms of levels on the SPY ( NYSEARCA: SPY ), we are kind of eyeing up this 200-period simple moving average on the weekly chart. That comes around that 350.00 level. If I zoom out here you can see this blue line has been pretty important. When we’ve been below it has been bad news. When we get above we get a nice little trend.

We are still above right now but I kind of think the market wants to test this zone because it’s been tested in pretty much every major downturn in the last 10-years. And so here we are again, are we going to test it? Are we going to stay above and hold above and do that on volume? So that is kind of the level I am watching here on SPY ( NYSEARCA: SPY ), right around that 350.00 zone.

On the Qs ( NASDAQ: QQQ ) you can see, they have been weaker and so we are closer to that 200-week simple moving average. And I kind of have the feeling that because tech has been punished more than most of the SPY ( NYSEARCA: SPY ) this could be the signal that turns first. And even zooming out here, again, it’s the same thing. Every major downturn we’ve tested it and either held above or not. And when we hold above good things happen.

And so here we are, QQQ ( NASDAQ: QQQ ), coming closer to this 200-week moving average, right around the 260.00 level. I think the 260.00 zone is pretty important here on the Qs ( NASDAQ: QQQ ). And that 350.00 level is pretty key here on the SPY ( NYSEARCA: SPY ).

Now, in terms of getting in first, there is a lot of fear, at least that I am seeing in retail traders in terms of, I have got to buy the dip, I have got to buy the low. I need to buy the lowest possible point. For me, that has never really worked, I have never been a great bottom picker. If I try and pick a bottom chances are I am getting stopped out because I’m not good at it.

What I want to see from the SPY ( NYSEARCA: SPY ), again, is a strong move, ideally around that 350.00 level coming on higher than average volume. But I think it is okay to wait for that. Wait for that confirmation of higher prices. Because all year long if you have been early you’ve been wrong. And so you don’t want to be early, especially in a strong downtrend.

David Ryan who is a world investing champion said something that really kind of struck a chord with me today. I even tweeted it out, it just has to do with the market generally. What we have seen the last couple of days, even here, 1, 2, 3, 4-days in a row, the market opened strong, as it opens greenish, and then closes weak. It opens up, closes down. Opens up, closes down. Opens up, closes down. Now, that is what happens in weak markets, we get a strong open and a weak close. In strong markets, we get weak opens and strong closes.

And so that is what you want to look for, in my opinion, to really kind of get active in this market. You want to look for a market that opens up lower and closes up stronger. Because that tells you that the buyers are now in control. And we haven’t really seen that for any length of time in this sequence here. So watch for that, for a potential trend change, and don’t feel the need to be early.

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