BY ANDREW GIOVINAZZI
March 7, 2025
Yo Pit Crazies,
If I am looking at SPX these days, I am probably wondering if it is time to buy the dip. Now more on that later but the solid and sharp selloff is proving to run a lot longer than folks realize. We are only 5% from all time highs and stocks were 6000 SPX on Monday on the open. Noty long ago we were celebrating D.O.G.E saving money and a possible resolution to the Ukraine situation.
Now all of those things have unraveled:
D.O.G.E can save but Congress can only “freeze” spending at huge level
Germany is now going to raise funds for Ukraine and an army which seem inexplicable
Bond Yields are marching up again
Tariffs are raising recession fears with inflation popping up again.
The short answer is that the market still has plenty of room to fall. Can all of the above be repaired in the near future? Yes it can but today it is not.
SPX 30 Day chart with 1 day candles
Here is the easiest way to tell what is going to happen. If you want to care less about what happens day to day, check out my Two Way Trading strategy here.
Here is the best tell for Friday
VIX keeps going in the same direction
VIX has been going straight up making higher lows as we go. Whatever is causing the selloff in SPX has not abated and continued into the close on Thursday. We do have an NFP number and that could cause a temporary gap higher in SPX but that will not solve the issues that have put SPX where it is now. VIX moving higher, like below, is a symptom of news running one way with no relief. The jobs number can provide a temporary relief but it will not solve the other issues.
VIX 30 Day chart with VVIX on the bottom in red
I thought there would be a reasonable chance to get VIX back into the Teens this week on Monday but that is dashed. Until some of the bigger issues around the debt and spending can get resolved, SPX will stay volatile and I expect to see VIX above 30 at some point in the next week since there is no let up in sight.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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