3/7/25 Recap

The SPY had its first open below the 200 day in over a year today. It made an attempt back over it and has proceeded lower. You can see we bounced right off that 565.15 level that was the previous breakout. This is ugly but historically speaking, the market does not spend too much time below the 200 day outside of recessions and we just are not in a recession right now.

The bigger concern here is we are going to close below the 21 ema on the weekly for the first time since October 2023 today. This is a big trend shift. You can see the 8 is about to cross through the 21 ema for a bearish crossover. This is just a terrible setup BUT there is hope, we’re holding the previous breakout and the 50 week is right there, so there is a glimmer of hope we could bounce somewhere around here. If we lose the 50 week you’re looking at opening the door to the low 500’s on the SPY. Without being too political I think Trump showed his hand yesterday regarding the market. He mentioned not looking at the market then a few hours later blamed “globalists” for the selloff. Trump watches the market and he was first to blame Biden for the weakness in 2022 and first to claim markets were going green because he was leading the polls in 2024. The market has always been his barometer of the economy and in 2018 when we sold off he barked so hard at Powell, blaming him for the market, and we reversed course quickly. So while some are saying Trump has changed and the market isn’t his priority this time, his comments yesterday don’t back that up.

The index that looks the worst right now is easily the IWM, small caps are almost at the 200 week, that is a near 4 year moving average. This just isn’t the environment for them to work. If you want to sell puts at 180 or something well below the 200 week, you have my blessing but this is down 20% in 3 months.

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