Trading SPY and QQQ Divergence
Index divergence occurs when SPY positioning points one direction and QQQ positioning points another, which is a more advanced read than an aligned chart.
What is SPY and QQQ divergence?
Divergence is the condition where SPY positioning structure and QQQ positioning structure point in opposite directions at the same time. The disagreement between the two indexes appears intraday, across a weekend, and most commonly in the sessions ahead of a scheduled event.
How does the Obsidian desk trade divergence?
The Obsidian desk watches for the lagging index to begin moving, because once one index commits, the other index frequently follows. The setup requires patience and is treated as an advanced read rather than a starting point for a trader new to positioning analysis.
Why does divergence happen at all?
SPY and QQQ carry different constituent weightings, so a technology led move reshapes the QQQ option chain far more than the SPY chain. Divergence therefore reflects genuine differences in where hedging demand has concentrated rather than an error in either chart.