US Markets - Updated thoughts on the QQQ, S&P 500 and a few other charts to tie things in.

Cerundolo Investment Research    

US Markets Update  

Volume 6, Issue 7
January 30, 2022

Items of Interest: 

When at Wellington Management, I worked closely with the Asset Allocation team in both reviewing a host of markets and managing a long/short global macro portfolio. We met every Tuesday, hence the title of my "Technical Tuesday" report, alongside three other colleagues on the Technical Analysis front. My tools are different than most, and this is what I know works for me after 30+ years. I have used the term "poke and probe" in a few meetings where I believed the odds were in favor of a directional trade based on what was lining up in my work. We initiated a trade as a poke to see if it would stick, and press the position once it would take hold.

As this relates to what we have now, the S&P and NDX are on the cusp of closing up for the first month of 2022. I believe we have a decent short-term low in place. The first chart below is a weekly updated chart of the QQQ and shows that it has held at the MOB target band. The original chat we sent out last week is at the end of this note. The AAII bearish sentiment reading is as high as it was last spring, which coincided with that March low. The VIX has also reversed from an extreme reading. We are expecting a move back down to the 20 area.

Closing below last week's low in the S&P and NDX would be a negative for sure. Let's see how we open the week and go from there.

As a side note, I will be out this Thursday through possibly Tuesday of next week for a surgical procedure. I will be checking emails and will try to get back with any questions.

An extreme bearish reading in the AAII Bears individual investor sentiment. We view this high reading as a contrarian bullish stat.
The last spike high at 52.5 last year Q1 - Q2 coincided with S&P 500 March low.