Finance

Trap Doors to Watch in SPY and QQQ, Charts Show

SPY hit a fresh all-time high in early 2026. The chart pattern is described as an ending diagonal, signaling waning buying power. Two downside trap doors sit at 679 and 670, with a break potentially targeting the 200-day moving average near 634.

📅 January 20, 2026
⏱️ 2 min read
Trap Doors to Watch in SPY and QQQ, Charts Show

Key Takeaways

  • SPY hit a new all-time high in early 2026, with an ending diagonal pattern suggesting waning buying power.
  • SPY has downside trap doors at 679 and 670; a break could target the 200-day moving average around 634.
  • QQQ forms a flat-top triangle, with trap doors at 610 and 600 and a potential move toward the 200-day MA near 566 in March options.
  • A March 20 expiration hedging idea uses a QQQ 595/565 put debit spread; stated cost and break-even have inconsistencies that require review.
  • For a $1 million Nasdaq-100 exposure, a 7.5% drop to the 200-day MA implies roughly $75k of downside, needing around 31 spreads to hedge fully or 16 to hedge half.

People Involved

  • Todd GordonFounder of Inside Edge Capital

Entities Involved

  • SPDR S&P 500 ETF Trust (SPY)S&P 500 ETF
  • Invesco QQQ Trust (QQQ)Nasdaq-100 ETF
  • Inside Edge CapitalInvestment firm of Todd Gordon

MarketMoodz Analysis

For investors, these levels translate into concrete risk-management actions. The SPY 679/670 trap doors and QQQ’s 610/600 levels create clear hedging anchors, with the proposed March 20 QQQ put debit spread offering a cost-effective way to cap downside. However, the numbers around the hedge (cost vs. break-even) appear inconsistent and should be validated before use in real trades.

Historically, the 200-day moving average has acted as a gravity line for breadth moves, and patterns like ending diagonals can precede pullbacks—though chart interpretations are subjective and not guaranteed signals. The piece frames hedging as a data-driven approach rather than a prediction, keeping risk controls in focus as growth rotation persists.

What to watch next includes a close below 679/670 on SPY or a break under 610/600 on QQQ, which would tilt the setup toward test of the respective 200-day MA nearby (634 for SPY, ~566 for QQQ). Also monitor March option activity and any shifts in sector leadership as investors reassess exposure to U.S. growth versus safety.

Source: Original Article

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