With macro much more in focus in 2014 (and the return of risk-on/risk-off), options traders have turned their attention to the broader indices more than individual stocks. As the SPY holds the 100 day moving average this morning so far once again, we wanted to take a tour of the major indices to see where support and resistance lies.
First, the SPY has bounced near the 100 day moving average all week, and that area coincides with a congestion area from late October/early November:
If the 100 day breaks (around this week’s lows, near 176.75), the next area to watch will be near the September highs, around 173.50. The big kahuna, of course, is the 200 day ma, now around 170.75.
Resistance in the SPY is near the 50 day moving average, now around 181.25.
The DJIA has been the weakest of the widely watched indices. In fact, the Dow has broken below its 100 day ma and its September highs this morning, though it’s fighting back:
The $157.50 level is the important spot to watch there. The 200 day ma in the Dow is only 2.5 bucks away from the DIA etf right now, around $154.50.
The IWM looks more similar to the SPY, though it has been stronger overall for the past 6 months. IWM has been bouncing between its 100 day ma ($110.50) and its 50 day ma (113.30) for most of the week:
A break of the 100 day ma brings the September high into play, around 107.50. The rising 200 day ma in IWM is down around 105.
Finally, the strongest major index by far has been the Nasdaq, even with AAPL’s weak performance this week. The QQQ is actually right at its 50 day ma, and has not even threatened its rising 100 day ma this week:
In fact, the QQQ has shown such relative strength over the past 4 months that the September high is all the way near the 200 day moving average, just below $80.
Next week is a packed economic data week, with both ISM’s and the payrolls data on Friday. Macro themes will remain in focus, and traders are likely to continue to watch these levels in the major indices as a guide for positioning.