MARKET WRAP

A fairly steep sell-off over the past two weeks got even steeper today. Whether than indicates we’re close to temporary seller exhaustion remains to be seen. Here’s the damage today: SPX -2.7%, QQQ -3.8% and IWM -2.7%. Backing up the assumption that this is now a full on recession scare for investors, the US10y yield was down 0.09, now 4.23% and oil continues lower, down -1.6%. The VIX nearly touched 30 and closed near 28. BTC is now below 80k. It’s unlikely the overall story shifts unless we get some resolution on the macro front, but violent countertrend rallies from here are possible. For the record, this was Nasdaq’s worst day since 2022.

On today’s MRKT Call, Carter joins to discuss what a move to the Covid low uptrend would entail. On RiskReversal Pod, Guy and Dan dive deep into today’s mayhem and look forward to key economic data later this week. Enjoy!

MRKT MATRIX: March 10, 2025

Today’s Top Stories:

• Dow tumbles more than 800 points, Nasdaq falls 4% as market sell-off intensifies on recession fears (CNBC)

• Morgan Stanley Joins Chorus of Volatility Warnings on US Stocks (Bloomberg)

• Is the U.S. Heading for a Recession? Here's What the Experts Say (WSJ)

• Short-Term Bond ETFs Rake In Billions Amid Recession Alarm Bells  (Bloomberg)

• What the Dot-Com Bust Can Tell Us About Today’s AI Boom (WSJ)

• Tesla’s stock defied gravity for years. Is Elon Musk’s EV party over? (Reuters)

• TSMC’s Sales Quicken in First Two Months in Upbeat Note for AI (Bloomberg)

• U.S. Likely to Ban Chinese App DeepSeek From Government Devices (WSJ)

• Microsoft Creates In-House AI Models It Believes Rival OpenAI’s (Bloomberg)

• ServiceNow Nears Deal to Buy AI Assistant Maker Moveworks (Bloomberg)

• Justice Department Reiterates Demand to Break Up Google (The Information)

• Apple Readies Dramatic Software Overhaul for iPhone, iPad and Mac (Bloomberg)

Today’s MRKT Call is Presented by MoneyLion

Chart Check On Stocks As Nasdaq Enters Correction

The show kicks off with a deep dive into today’s equity market turmoil and whether a countertrend bounce could be on the horizon. Carter joins to break down the sell-off, pointing out that the hardest-hit stocks so far were the ones that had been the most overextended before the downturn—regardless of sector. He then highlights the long-term SPX trendline from the Covid lows, showing that a 21% decline from the highs (and 35% for QQQ) would be needed to test that trendline. A quick look at the US10Y yield follows, examining its movement in relation to the broader market sell-off. Next, the team discusses assets that have reversed the most since their election-driven pops, leading into a deeper dive on BTC and TSLA. The Chart of the Day focuses on which regions of the country could face the biggest impact from government spending cuts and layoffs. The conversation then shifts to financials, with a breakdown of the KRE (regional banks) and BKX (national banks) charts, highlighting their recent technical breakdowns. A check-in on META follows, with a discussion on whether recent controversies could lead to brand damage. The Call of the Day spotlights AAPL, followed by a quick roundup of several key charts, including PLTR, APP, and RDDT—stocks that had recently taken on meme-like trading behavior. The show wraps up with a look at US equities versus international markets and a debate on the merits of diving in soccer.

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s RiskReversal Podcast is Presented by CME Group and SoFi

Market Mayhem On A Monday Morning

Dan Nathan and Guy Adami discuss the current state of market volatility amidst key economic indicators such as CPI, PPI, and consumer confidence reports looming. They delve into the implications of a declining S&P 500 and NASDAQ, analyzing the rise in the VIX and market participants' readiness for prolonged volatility. The duo also examines the impact of geopolitical events, including tariff wars and global alliances, on economic performance. Tech sector movements, particularly within the context of AI and software stocks, are scrutinized alongside significant retail and banking sector performances.

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What’s Next?

Today's stock market sell-off accelerated after what had been a relatively orderly decline over the past two weeks. Selling pressure intensified as key technical levels gave way over the past few days, leading to a sharp pickup in volatility (VIX nearly 30) and heavier downside momentum. 

The combination of weak sentiment, policy uncertainty, and continued concerns about economic growth is what’s driving the selling. However, as the market reached an important level in the options market—one tied to significant positioning—some of the forced selling ran its course, at least for today, as buyers finally triggered a very modest bounce off the lows into the close. While it's unclear whether this marks a potential near term bottom or just a temporary reprieve, the exhaustion of some of the selling pressure at a key level in the market structure gave us at least a temporary inflection point that prevented a further puke below. However, new catalysts need to emerge to shift sentiment overall.

In fact, the SPX strike mentioned above doesn’t go away until it is rolled, potentially this week or early next week. That likely means some serious intraday moves over the next few days, lower or higher. Keep an eye on it because a significant break below it could be even uglier as it’s not “support” per se, in fact the opposite. But it did help accelerate some forced selling into it, and if the market can find stability in the next few days, folks on the other side of those puts will find themselves over-hedged on rallies and be forced to buy higher should we bounce from here, especially with this Friday being a triple witching expiry.

Speaking of options, on February 20th, with SPY about 50 points higher we detailed a potential portfolio hedge using SPY options. The trade was the SPY March 31st +595p/-565p put spread, which at the time was about $3. With this move lower the put spread is now trading about $21. It’s max gain is another $9 potentially, which it would achieve if the SPY closes here (or lower) over the next two weeks. But as mentioned originally, the original intention of the trade would change if we got a move lower like this, so it may perhaps be time to look to book the profits of the hedge, and potentially look to re-enter another inexpensive replacement out to April or May. For instance, the May +530p/-500p put spread currently costs about 4.50 (SPY 561). Ideally on a bounce, if it could be had for under $4 it may make sense as a protection against an absolute bloodbath that takes the market down about 21% from the highs (something mentioned on today’s MRKT Call as the lower band of the uptrend from the Covid lows). That sort of positioning also makes it a bit easier to step in on the long side to buy some beaten down names. Put spreads that sell an option vs the long put are really the only way to go at this point with implied vols so high. And out of the money and dollar cheap as well, as one could waste a lot of money paying for protection closer to the money should we bounce soon.

We’ll talk more about these sorts of trades (and some contrarian bullish ones) over the next few days.

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