BY ANDREW GIOVINAZZI
March 21, 2025
Yo Pit Crazies,
Traders got an earful this week on a variety of topics:
-The Fed Chair still sounded hawkish while discounting GDP growth
-The Invesco QQQ Trust (Ticker: QQQ) could not hold a rally as mass Mag 7 selling kept going
-Much of D.O.G.E. is getting held up in the courts and it remains to be seen if they will ever save money
The S&P 500 Trust ETF (Ticker: SPY) closed the week right where it began. I’m currently holding a put spread in SPY through Weekly Profit Cycles, along with some VIX calls, but both are struggling to gain real ground on Friday. Despite the market moving 2%, it’s essentially just “orbiting,” moving up and down without much direction. The Weekly Profit Cycles strategy needs a 2% move in a month, which has happened over 96% of the time the last 10 years.
Looking at the chart below the SPY put spread was a decent close Friday morning and might be a close Monday.
SPY chart with 1 day candles
SPY is going nowhere for the week with VIX around 20 – this is a bit of a surprise. But for now, I am looking to see if any of the factors that had traders bullish at the beginning of year are still in play.
The biggest negative factors this week have been poor earnings guidance.
Three decent bellwether stocks like Fedex Corp (Ticker: FDX), Nike Inc (Ticker: NKE) and Micron Inc (Ticker: MU) did not have bad earnings but gave awful outlooks. MU especially is back on the earnings train but spooked everyone about the outlook going forward. They said it was bad enough to get the sellers back out.
The AI juggernaut is still rolling but given all the uncertainty, investors do not want to pay up for it anymore. That would make stocks like MU a great deal right now, with a price more than 33% lower than its highs. The problem lies in the gap between what’s actually happening and what companies are saying. Fed Chair Powell mentioned that things don’t look bad, there’s no need to cut rates, and tariffs are creating some uncertainty. Companies are echoing similar sentiments. None of that necessarily means things are truly bad, it just reflects some nervousness in the market.
The VIX isn’t rising, and the SPY isn’t dropping. At some point, the market will have to confront the actual bad news. Right now, the negative sentiment is mostly driven by expectations, and the VIX is closing at a two-week low, with the lowest realized volatility in a month for the SPY.
Those are recipes for a higher SPY next week.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain