SPY closes all time highs but cannot get VIX to all time lows

BY ANDREW GIOVINAZZI

June 29th, 2025

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AG’s alter-ego Vol Man here with my weekly analysis. As usual, I will start with my last forecast…

Last Week’s Big call

Last Week ending June 27th:

Iran is not really a threat anymore and Trump gave them two weeks to come to the table. Stocks liked that but in the short term with the Fed stance on rates and no real good BBB, there is thin gruel for a market rally. However stocks don’t sell off and I think that is the signal you want to follow. We retake 600 SPY next week but I don’t see VIX doing much until there is a break in the Middle East news so maybe 19.50 for VIX. If there is real Mideast progress we could see $610 or higher in SPY and oil gets a 10% haircut.

Weekly Wrap up

I’d give myself a B+. The progress did happen in the Middle East because the USAF took out Iran Nuclear capability. SPY got way over $610 to all time highs and oil indeed got the 10% haircut. Not too bad if I do say so myself.

The Iran/Israel thing ended with a bang. There might be a dust up but markets generally took it as Iran is in decline and stocks rallied hard on Mideast Peace prospects.

As a sidenote, the BBB is still a turkey with the Republicans making it worse by the day and voters regretting any of them are still in office. There is a mandate to control spending which is lost on the Senate Leader as he is pushed around by some appointed parliamentary hack. Yet bond prices keep going up as the dollar declines. There was a short selloff Friday from all time highs as Canada and the USA left the trade talks.

My Flash 5 portfolio ripped with some 50% options gains and all stocks up. I expect the 2nd half of 2025 to make a bigger run. AI and AI adjacent stocks went nuts this week.

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SPY daily price action over the last 30 days with 1 day candles

SPY Sigma (volatility per term) for Jul, Aug, Sep

SPY traded $615 on the post attack euphoria and relief rally. GDP was down slightly in Q1 as the early D.O.G.E. and USGOV hiring freeze weighed on output. Stocks liked it. It will need more of it from Congress.

SIGMA volatility slumped to 1 month lows but the contango values are crazy wide as the circled area shows. Traders are still paying money for 2 and 3 month options. Short term options are getting smoked because of the July 4th holiday.

SPX realized volatility snap on Jun 27, 2024

10-day realized volatility (HV10) ticked up to 12.77. Monday was a bit crazy after the weekend but trade recovered. Realized volatility is very subdued right now. It does not mean stocks cannot start moving again, it is just that we are not moving now.

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VIX Volatility Curves

Closing VIX curve, Jun 27, 2024

Closing VIX cash and curve, June 20, 2025

The VIX curve dropped into a heavy contango and stayed there for most of the week. There is serious pressure on the VIX curve getting pulled down to the VIX cash. The curve is high enough to absorb most VIX cash moves. It is the shape of relief and a solid bull market.

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OP VIX Zone Watch

VIX ZONE 1 9-13

VIX ZONE 2 13.01 TO 17.99 ←We are here

VIX ZONE 3 18-23.99 We were here

VIX ZONE 4 24

VIX fell out of Zone 3 early in the week and it is on its way to Zone 2 lows. That is an area it had not reached since last February.

I have a great trade set up for that already.

VIX 30 day chart with 1 min candles

The VIX story was apparent from the chart above. The Israel/Iran conflict was over before it started with a total return to pre-crisis levels.

The Big Call

Every week that goes by, it seems stocks care less about the BBB and figure the bond market will fix the stupidity that reigns in Washington D.C. It is a generational opportunity to fix things and Republicans cannot get it done. The state Medicaid payout since COVID is like Crack for politicians and they cannot get off it. Right now AI matters more. Usually the 4th of July gets folks happy and an early trade deal will make people happier. I am guessing VIX keeps drifting to the realized vol and SPY keeps going up in fits and starts. 620 is likely the high next week for SPY and VIX mid 15s.

To Your Trading Success,

AG aka “Vol Man”