BY ANDREW GIOVINAZZI
January 8, 2024
Yo Pit Crazies,
There we go another day into Zone 3 albeit for a brief moment. That is a number for VIX just above 18. Just when rates and the FOMC did not matter it starts to matter again right when the new POTUS takes office. A move into a new Zone represents a large change in sentiment. The market was restless now it is on the verge of becoming unhinged.
What is causing this volatility? Didn’t anyone listen to Jen-sen Huang at CES 2025? Tech is lit man! Nvidia Inc (Ticker: NVDA) made an all time high Tuesday. The problem is this little wrinkle on Dec 18th of 2024. The Fed started to send mixed signals. DJT started talking about annexing Greenland instead of cutting spending. Traders want the USGOV to stop spending so much.
Here is what you need to know since the meeting caused a 24 point drop in the S&P 500 Trust ETF (Ticker: SPY) or around 4% last time around.
SPY is setting up the opposite of the last time
SPY is running a 20 point weekly range instead of the 5 point range right before the Christmas Break. No trader liked the new higher rate talk with the Fed lowering. What the market is predicting for rates is provided here.
After the run to 600 SPY early Monday, stock has tried but cannot hold up. The tea leaves from the FOMC meeting will help but it does seem bond prices are already going in one direction and that is down. Rates are going up regardless of what the Fed is trying to do.
SPY 30 day chart
Stocks have not fully shaken off the move on Dec 18th. See below VIX has not gotten back to the pre-Dec18th lows. That news should come out and help traders Wednesday but we are closed Thursday. Friday is likely the day of action.
VIX 30 day chart
I expect today to be very soft for SPY, as in down, but VIX should cool off a bit by Friday’s close. Just in time for Easiest Trade of the Year.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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