The 200-week moving average or about 4-years, represented on the charts as a green line, is starting to look like one of the more important and pivotal chart points.
Although there is very little written about the 200-WMA, only in 2007 did the SPY break its 200-WMA for a period over a year. In 2011, SPY tested it, but came right back through it.
Same thing happened in 2020. SPY broke below the 200-WMA and came right back above it within a couple of weeks.
In the aftermath of last week's market plunge and continued rally since, it is worth noting that the 200-week historic weekly support levels held for the SPY and the DIA, both of which were in danger of violation.
Last week the SPY crossed almost exactly the 50% retracement from the COVID lows to January in 2022 highs when it traded at 351.
This week, SPY is back above the 200-WMA and 360.
The holdouts are the Russell 2000 IWM and NASDAQ 100 (QQQ). If either or both turn lower rather than clear their 200-WMA, that would be a sign this rally is over.
On the other hand, if IWM and QQQs can clear the 200-WMA, then another leg higher is likely.
We'll see how Wednesday shapes up.
At a 200-week MA and 50% retracement of the recent bull market, there are some positive divergences that could set the stage.
Watch SPY to hold 360.
Watch QQQ to take out and hold over 274.
Watch IWM to clear 178.50. Plus, 170 is now a clear pivotal area.
Finally, watch the DIA to hold 299. Interestingly, many waved their hats when the Dow cleared 30k. Now, that area looks really important both technically and psychologically.
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- S&P 500 (SPY): Reached the 50% Fibonacci level from the March 2020 lows on Thursday, at 351, then rebounded sharply. Under 3510, support 330 and, on the upside, resistance 360, 370, 382 and 396.
- Russell 2000 (IWM): 162.50 support, 177 resistance.
- Dow (DIA): 285 support, 305 resistance.
- Nasdaq (QQQ): 255 support (could go to 220), 270 resistance.
- KRE (Regional Banks): 56 support, 60 pivotal, 65 resistance.
- SMH (Semiconductors): 167 support, 190 resistance.
- IYT (Transportation): 195 support, 207 resistance.
- IBB (Biotechnology): 116.00 support, 124 resistance.
- XRT (Retail): 54-55 support, 62 resistance.
Director of Trading Research and Education