MARKET WRAP

Stocks traded in a tight range today, with lows right about at the 200 day moving average for SPX and highs that couldn’t extend very far above. For the day, SPX +0.16%, QQQ +0.53% while IWM gave up some of yesterday’s big gains -0.65%. Notable gainers included TSLA, AAPL and AMZN. Losers included MRK, UPS and WMT.

It was a quiet day elsewhere. The 10Y yield was down slightly to 4.32%. Oil was basically sideways and Gold ticked higher after yesterdays small move lower. The VIX is now 17, almost cut in half since its near 30 spike. But, there’s some potential market moving events on the near horizon. More on that at the bottom of the email.

• On today’s RiskReversal Pod, Gene Munster joins to talk the broader AI trade and specific challenges for companies like Nvidia, Tesla, and Apple

• On MRKT Call, trading what could come next after this rally, updates on last week’s trades and answers to your questions. Enjoy!

MRKT MATRIX: March 25, 2025

Today’s Top Stories:

• Stocks waver as Wall Street digests Monday's strong rally (CNBC)

• UBS Top Strategist Sees Consumer Slowdown Hitting the S&P 500 (Bloomberg)

• Recession is coming before end of 2025, generally ‘pessimistic’ corporate CFOs say: CNBC survey (CNBC)

• Retail traders plough $67bn into US stocks while investment giants flee (FT)

• Gold Edges Higher as Surge in ETF Holdings Continues (Bloomberg)

• Tech Chiefs, Foreign Leaders Urge Trump to Rethink AI Chip Curbs (Bloomberg)

• Cathie Wood Sticks With Tesla, Predicts Stock to Hit $2,600 (Bloomberg)

• Carvana gets an upgrade from Morgan Stanley’s Adam Jonas, who says there’s a ‘unique’ buying opportunity (CNBC)

• Boeing Gets Lifeline in Pentagon Deal to Build Most Expensive Jet Fighter Ever (WSJ)

• Trump defends advisor Mike Waltz for Signal texts to reporter about Houthi strike (CNBC)

Today’s MRKT Call is Presented by Robinhood

Stocks Bounce off the Lows: Trust the Rally?

Can this rally be trusted? Dan and Guy discuss where we are now, look for the next move from here, place a new trade in SPY and update one in TLT:

• Live Trading: SPY May put spread

• Trade Update: Last week’s TLT trades

• Chart of the Day: IGV

• Call of the Day: CRWD and NET

• Your questions answered:

  • Is the April 2nd deadline a negotiating tactic?

  • BABA’s recent weakness and what’s next?

  • Is it too late to buy miners like GOLD

  • What would happen to TSLA stock if Musk ever stepped down

  • What greeks are you looking at most in option trades

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 Current and RBC

Gene Munster: The Fateful Eight & Elon's Faithful Base

Dan Nathan and Gene Munster, Managing Partner at Deep Water Asset Management, dissect the latest market movements and discuss key tech stocks. They cover NVIDIA's GTC event, Tesla's recent surge, and Micron's recent earnings. The conversation pivots to market reactions to tariff news and the impact of potential April 2nd targeted tariffs, especially on tech stocks. Gene shares insights on the broader AI trade and specific challenges for companies like Nvidia, Tesla, and Apple in light of market conditions and geopolitical factors. The episode also delves into Google's search page overhaul and its competitive landscape, as well as X's (formerly Twitter) integration of AI.

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What’s Next?

After yesterday’s rally, equities mostly traded within a narrow range today, with the potential for consolidation around the 200-day moving average (about 5755) for a few sessions. A key factor to observe in this rally has been the sharp decline in implied volatility. Traders have been pricing in a brief period of calm before the release of key economic data, the end of the month/quarter, and the April 2nd tariff deadlines, but that compressed vol now extends out for a few months, with implied vols in April and May sharply lower from last week. This could create an opportunity for traders looking to position for the next market move, as options are now significantly cheaper than during the correction. 

One bearish/hedge trade discussed on today’s MRKT Call is the SPY May +570p/-540p put spread, priced around $6. This provides near-the-money protection for those anticipating another market leg lower. Traders who are less bearish but still seeking protection while buying on dips can find cheaper spreads by adjusting the long put strike or shifting the entire spread lower.

On the bullish side, for those expecting a rally back to new highs in the coming months, implied volatility remains elevated, despite last week’s compression. Given that rallies tend to encounter resistance, which further compresses volatility, using call spreads is a more efficient approach here. Selling an upper strike call would benefit from this compression, and have the potential to decrease in value out of the money even as the market or that particular stock goes higher, putting the long strike in the money. A potential win/win on a rally.

The relative calm of today could last a few more days but some key events over the next week likely give us a sense of which way we resolve this pause at the 200 day moving averages:

The Days Ahead:

• Thursday Morning: GDP Report

• Friday Morning: PCE & UM Consumer Confidence

• Monday: End of Quarter/Month

• Wednesday: Tariff Deadline
  

The market’s expected move through next Wednesday is about 2%, implying an SPX range of approximately 5650 to 5875.

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