The 200-week moving average (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.
There is very little written about the 200-WMA. But only once, in 2007, did the SPY break its 200-WMA, for a period of over a year. In 2011, SPY tested it, but came right back through it. The 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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ETF Summary
S&P 500 (SPY): Watch for SPY to hold 360 and clear 380.Russell 2000 (IWM): Watch for IWM to clear 178.50. Plus, 170 is now a clear pivotal area.Dow (DIA): Watch for DIA to hold 299. Interestingly, many waved their hats when the Dow cleared 30k. Now, that area looks important both technically and psychologically.Nasdaq (QQQ): Watch for QQQ to take out and hold over 274.KRE (Regional Banks): Bank earnings have been strong. This sits right on support at 63.00 and needs to clear 66.00.SMH (Semiconductors): Weak link and needs to get back over 184 hold 175.IYT (Transportation): Cleared 207, which would be good if holds. 215 is its 200-WMA.IBB (Biotechnology): A push though 125 should get this to 130, provided 121 holds.XRT (Retail): 62 is the weekly chart resistance, while the best sign is the hold of longer-term support at 55.00.
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Wade Dawson
MarketGauge.com
Portfolio Manager