100 SPX points in 3 days

BY ANDREW GIOVINAZZI

March 22, 2024

Yo Pit Crazies,

The Trading Desk ran a nice SPX strangle this week for an 18% gain. Mark said $5k in but really it was $7000 so about $1200 in gains which would go a long way to covering the Trading Desk for a year. The next FOMC day or CPI is coming so get ready for another fun one. Join now.

So below is the 100 point rally we talked about in SPX. We were very sure that would happen and lucky enough, it did. The interest rate news adds a veneer of certainty to an uncertain market. Stocks rally on certainty and selloff on uncertainty. The algos push around stock prices on any news snippet. Massive government spending has caused inflation and growth but I have not heard that from the Fed yet. Just “troubling inflation data” from the 1st 2 months of 2024.

A rally is a rally and closing near intraday all time highs is great for stockholders. I mentioned yesterday that VIX printed new 1 month lows and that is generally bullish. Thursday and Friday should stay on trend with most VIX drops now less intense.

SPX 20 DAY CHART

I covered something that was curious in the Pro Session today.

It happens somewhat frequently and always with the same results.

Let’s take a look.

The indicator is VVIX

The VVIX is the Volatility of the VIX index. Uses the same method as VIX does for SPX options. Over the last 2 years, VVIX does not like staying the 70s for very long periods. It is usually the sign of a short term market top.

VVIX 2 year chart

It might take a couple of days or a week to change but it normally does and when it does VIX goes for a small rip. That is not to say I think the rally is over in SPX, but things will sell off from time to time in a bull market. In the Trading Desk I ran a long SPDR S&P 500 (Ticker: SPY) call spread and VIX call butterfly. I closed the SPY call spreads for good money and now can ride the VIX call flies to expiration. Maybe a VVIX bounce will help!

To Your Trading Success,

-AG