The $QQQ (Nasdaq) closed at $379.86 on Jan 07, 2022.

Important support numbers to follow:

• Jan 2022 monthly low = $378.04
• Dec 2021 monthly low = $377.47

IF the $QQQ can sustain trade above the band between $377.47 – $378.04 the overall market should trade considerably higher.

If this key band fails, and the $QQQ spends time under this crucial level – I will most likely send a note to all our options members to take caution as we expect volatility to trade higher and markets to trend lower. 

If this lower band holds, volatility should also trade lower.  Volatility is the market's expectation of risk.  When the market trades higher, risk is lowered in the market and hence volatility levels trade lower.

In the chart above, notice how the Nasdaq and Russell 2000 are both trading down to their lower volatility bands.  If the $QQQ holds the December 2021 monthly lows we should see a bounce in Nasdaq and other Indices.

The Russell 2000 is trading inexpensive relative to the Nasdaq.  For this reason, our members' trades included an options trade in an inexpensive Russell 2000 ticker.  

To summarize – if $QQQ trades lower, and stay under key SUPPORT – expect volatility to rise and the market to continue to trade lower.  If $QQQ holds above support, consider looking for trades that correlate to the Russell 2000.  

That’s my plan.