12/30/2022 |
Market Update Into January 2nd: Good Riddance, 2022!
2022 has finally come to a close, and it feels like the collective sentiment amongst investors and traders alike is ‘Good riddance!’ The ‘Santa Rally’ was a bust, and here at year’s end, the indices find themselves in difficult spots, seemingly setting up for continued pain in the new year to come. Below, we’ll dig into the individual names and see how things are looking, but first, a word from Jake!
Weekly Analysis
This week, the SPY ETF closed at $382.43 (-0.13%), going inside on the week and closing below the AVWAP from the Covid low for the second week in a row. On the monthly time frame, the price was rejected at the 50% Fibonacci retracement from the all-time high. The pre-Covid high aligns nicely with the downward-sloping trendline that connects the recent weekly lows and bearish-biased traders might have their eyes somewhere near that level. Of note, also, is the weak seasonality that is generally seen throughout the first quarter of the year as well as the bearish-biased Unusual Options positioning.
This week, the QQQ ETF closed at $266.32 (-0.39%), taking out last week’s low. On the monthly time frame, the price was rejected at the 50% Fibonacci retracement from the near-term high. It seems there is little support keeping this name from fading lower, and bearish-biased traders might be looking to both the downward-sloping trendline connecting previous lows as well as the pre-Covid high as a potential level of support in the new year. Of note is the increase in strength of the seasonality reading from December to January, as well as the relatively even distribution of bullish and bearish Unusual Options positioning coming into the first quarter.
This week, the IWM ETF closed at $174.36 (-0.02%), managing to find continued support at the pre-Covid high. In addition to the pre-Covid high, the price is also currently being supported by the 50% Fibonacci retracement from the Covid low to the all-time high. These two levels will be of utmost importance in the new year. Of note, also, is the January seasonality reading, which shows profound historical weakness and the bearish-leaning Unusual Options positioning for the first quarter.
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