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Morning Market Rap 01/25/22 by CTG

SPY / QQQ / Vix

SPY 5 days, hourly candles (one with Fib levels of yesterdays massive move) S&P futures have so far traded in the upper third of yesterdays range, but testing that area currently, and debating on further giveback. Lose that 432.75 futures low from overnight, the bull flag look is off the table, and a quick continuation/pivot thru yesterdays highs becomes less likely. The 50% retrace of yesterdays move is 430.65 and the next area to watch if we lose the 38.2% retrace.

Start to follow thru under that level, and the odds we need to test closer to yesterdays LOD's becomes more likely. Yesterdays move was a straight V bounce off the bottom with no hourly trend change, so bulls are hoping to find and hourly "higher low" then "higher high" thru yesterdays highs, to gain some confidence. That type of trend change is what failed all of last week, and the shorter term RSI's (4hr, hourly) have now cooled off from deep oversold conditions at the morning lows, which makes room for more selling. 440.54 the after hours high before futures opened

432.75 the corresponding futures low

SPY 1 yr, daily candles Massive reversal off the lows yesterday as all timeframes up thru the daily were historically oversold. We decisively broke the October '21 lows, then bounced off the break out area from June '21, on the biggest volume in over a year, and biggest volume since the Covid crash. 420.76 the low from yesterday and first support on this timeframe

Losing that with follow thru wouldn't be a good look.

414.70 after that

404-405.33 area next 440.38 the high from yesterday and first resistance on this timeframe

441.97 the 200 day MA which bulls would like to see quickly reclaimed

448.06 after that

QQQ 5 days, hourly candles (1 with fib retraces of yesterdays move) Nasdaq futures have a similar look going, overnight weakness has us testing the 38.2% retrace of yesterdays move. Stay above that and bulls have a much better chance of continuation. 345.40 the corresponding futures low, which I'd use as the line in the sand to determine if bulls are losing some control. Then the 50% retrace next, at 344.08

354 the after hours high from yesterday, before futures opened

QQQ 1yr, daily candles Massive volume here yesterday on the reversal, biggest in over 3 years, including the Covid crash. Total dollar volume even more impressive. Bulls need to find an hourly higher low anywhere above yesterdays lows, then find higher highs above yesterdays highs to gain confidence. The more we retrace, the less likely that becomes, which is the pattern of failure we saw all of last week. 334.15 the low from yesterday and first support, after blowing thru October lows, and pushing deeper into the breakout levels from May/June '21

328.28 the June lows next

316-316.30 after that 353.98 the highs from yesterday and first resistance on this timeframe

362.18 after that

365.66 the 200 day MA overhead which bulls would ideally want to see reclaimed this week

IWM 3yr, weekly candles & IWM 3yr daily candles showing historical RSI Halted the plunge and found some support just above the January '21 lows from 1 year ago of 190.94.

191.23 the low from yesterday and most important support for bulls to hold.

Hourly, 4hr, Daily RSI was historically oversold at the morning lows, but that condition has now cooled so more selling isn't out of the question.

170ish is the breakout area from November of '20 after the presidential elections, and if bulls are ultimately unable to defend yesterdays lows, that might be on the table.

Feb Vix 1yr, daily candles Massive volatility and moves here. Touched 33.10 at the peak before the sharp back off. Trading in the middle of yesterdays range currently.

The Vix futures curve finally inverted (higher levels of volatility in the front months than back months), which it had resisted for most of the past year when we saw broad market sell offs.

This condition provides a tailwind to any long vol etfs like VXX or UVXY when it's present. It can reverse out fast too; especially if we start to see follow thru above yesterdays highs in the broad market.

Spot Vix 3yrs, daily candles A push up to the 40 level was last seen in October '20, pre-US presidential elections. These moves are as big as what we saw during the Covid crash. Expect wide ranges and big movement intraday, anytime the Vix is above 20 - and currently it's above 30.

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