SPY did the most amazing thing

BY ANDREW GIOVINAZZI

March 18, 2025

Yo Pit Crazies,

In a world of 22 VIX remember that I expect just under 1.25% per day in the S&P 500 Trust ETF (Ticker: SPY). SPY gapped down on some Middle East tensions and Alphabet Inc (Ticker: GOOGL) acquisition for a very expensive cyber security company, WIZ. That was enough to crush the tech heavy Invesco QQQ Trust (Ticker: QQQ) to near -2% on the day. A lot of big tech got sold. Funny to see my 2% trend hitting more and more stocks in SINGLE DAY MOVES instead of over the course of a month.

On the flip side there was Nvidia Inc (Ticker: NVDA) CEO Jensun Huang saying AI computer needs are 100x bigger than everyone thinks. Russia is also agreeing to a partial ceasefire at least for now. On balance we have a healthy retreat from 550 to 570 for SPY in 3 day trading days. It is also perfectly normal for a 22 VIX market as it reacts to any adverse news with very steep velocity up or down. Things seem to be acting more “normal” — for now.

Part of my goal in Market Action is to show you what’s normal, what’s not normal, and how to make money in both environments.

Right now, that’s with Two-Way trades, which are the foundation of my strategy Weekly Profit Cycles, where I leverage VIX and SPY movement for up to 20% every 14 days.

My SPY call spreads in Weekly Profit Cycle have swung from a bright green to a dull red, but I have some VIX calls to lean on and I am sure I will get another chance at VIX moving back higher with our recent volatility and still 30 days to go on that position.

That’s one of the beauties of Two-Way trades. I have 30 days for the market to make a move that it’s made 96% of the time for the last 9.5 years. Even if you’re not a betting man, it’s easy to see those are good odds. But when I look at the SPY chart above, the first question I ask is… why did we move only 1% down and no farther?

Here’s what I found – and it’s going to help you trade tomorrow.

VVIX spent most of the day going down after breaking 100 to the upside

VVIX is the volatility of VIX. Don’t let your eyes glaze over. This is important. VVIX is a good indicator of demand for VIX options. Knowing how OTHERS are trading VIX helps us know exactly what side of the trade we want to be on.

Here are key VVIX levels to watch.

If VVIX cannot hold 100 or more, demand is starting to fade and the scary Zone 4, or upper quartile when VIX goes above 24 cannot hold anymore. Think of it as the market tries to sell off, bids up the option prices, and then fades back. Stocks and option prices can do this, and VIX will fall.

10 day VVIX with 1 min candles

The FOMC Minutes and remarks are tomorrow after 2pm.

It appears to me traders do not want to aggressively sell stocks, or bid up option volatility in VIX until after the Fed Chair Powell Speaks. After that, my guess is the 22 VIX will look small on the back of the SPY move and then we see if the 22 VIX holds for the week.

Tomorrow morning I’m positioning myself with a trade that can win either way.

Weekly Profit Cycles is calling you – and we still have a monthly subscription option open. Grab that now!

To Your Trading Success,