QAT Systems, LLC

ETF Week in Review

In a holiday shortened trading week, we witnessed more intra-day volatility as a result of the situation in the Ukraine.


On Tuesday, the SPY made a ‘Fast Move’ to the ML1 level. This fast move failed and the SPY then became an intra-day reversal. On Wednesday, the SPY continued it’s downward move, reaching the MS1 and following through reaching the MS3 by the end of the trading session. On Thursday, the SPY gaps down on the Open. Keep in mind that a Gap Open is to be considered a ‘Fast Move.’ It seems as though a Fast Move may be a tradeable move in such instances. This is because we know that the market is likely to attempt to test the Low and Close from Wednesday. Friday, the SPY gapped up on the Open, tested the High and Low from Thursday rather quickly. And continued higher for most of the day.


Tuesday the DIA gapped down on the Open and traded in a tight range. Wednesday the DIA reached the MS1 level down shortly after 10 AM. It continued lower much of the day and reached the MS3 level down just before the close. Thursday, the DIA gapped down on the Open. The DIA traded in a tight range until late in the day. It began trading higher and reached the ML1 Level and tested Wednesday’s low. Friday, the DIA gapped Up slightly, but never tested Thursday’s High.


Tuesday, the QQQ gapped down slightly and made a ‘Fast Move’ back to test Friday’s Low and Close. Wednesday, the QQQ met the MS1 Level down shortly after 10 AM. It continued lower throughout the day and reached the MS3 level before the close. Thursday, the QQQ gapped down on the Open. Remember a large gap opening should be considered as a ‘Fast Move.’ In a gap opening, you should consider the distance needed to travel to reach the previous day’s price action. Something else to consider when studying gaps: How the market closed in the previous session.

Lessons for the Week: ‘Fast Moves’ have a tendency to come from ‘False Moves.’ Gaps on the Open are ‘Fast Moves.’ Pay attention to the distance the market needs to move. How far does the market need to to travel? This question will help you determine if a test is likely.

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