March 28, 2025
Scheduling Note and a Tough Market to Read
Before I dive into the tough market conditions, I wanted to let you know I will be traveling Monday through Wednesday of next week for my kids’ Spring Break. This means I will not send a Daily morning Option Order Flow email from Tuesday through Thursday. And while I will be traveling, as always, I will keep my eye on the market, and if we need to act on a position, I will send an update or alert.
Moving on to the market …
To say that there have been mixed signals as of late would be an understatement. For example:
The S&P 500 rallied 1.84% on Monday. Since Monday’s close, it has now fallen 3.2%.
Earlier this week, plenty of growth stocks popped higher by 10-15% off their lows and appeared to be back in gear … and since then, the last couple days, those growth leaders have given back nearly all of those gains and again look dreadful.
Also, option activity is equally confusing/divided. For example, here are two large trades made today in Robinhood (HOOD), one looking for a steep stock fall and another looking for a big rally:
Buyer of 5,000 Robinhood (HOOD) January 25 Puts for $2.40 – Stock at 41
Buyer of 10,000 Robinhood (HOOD) May 51 Calls (exp. 5/2) for $1.01 – Stock at 42
Stepping back, given these mixed market signals, and ahead of the much anticipated “Tariff Day” next week, taking a couple days off from executing trades is likely the right course of action (though as noted above, should a position need addressing, I will be available to send an alert).
March 24, 2025
Weekly Update
Despite some more worrisome price action throughout the week, the three leading indexes were able to eke out gains. For the week the S&P 500 gained 0.5%, the Dow rallied 1.2% and the Nasdaq advanced by 0.2%.
Stocks on Watch
I continue to stay on the sidelines with new buys, which is not fun or exciting, but as the old Wall Street saying goes, “Nothing good happens below the 200-day moving average,” and for now at least the S&P 500, Nasdaq and Dow are all below the 200-day.
However, there are some positive signs in the market as seasonally we are entering a more bullish time and the action in the VIX is intriguing (more on that in the Volatility section below).
And on the seasonal topic, via @AriWald from Oppenheimer: “Looking at the S&P 500’s average trajectory over the prior five years (2020-2024) the index has tended to top on February 16th, bottom on March 12th, and start to rally again on March 23rd,” as noted below:
So, IF the indexes are setting up for a move higher here is my list of potential buys, many of which I’ve highlighted in the last several weeks:
PLTR – Continued to hold the 80/85 level last week, and made a multiweek high above 90 on Friday.
HOOD – Option activity remains very bullish and the stock, while not great, has bounced nicely from its lows around 36, closing last week at 44.
GE – Impressively, despite the selling pressures across all sectors and stocks, GE is within striking distance of its highs.
Volatility and What Traders are Saying
The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 19.3, which continues its slow descent from its peak two weeks ago well before the market’s recent low, which is interesting.
And furthermore, via @market_sleuth on X regarding this recent VIX action:
“History was made with the recent 10.5% S&P 500 drop. Since the inception of the VIX there’s never been a 10% drop in 30 days with the VIX staying under 30. Ever. Until now.”
Essentially, starting two weeks ago traders stopped racing for downside protection against a “big” market decline despite the indexes continuing to bleed lower.
Now, I do want to caution that a VIX near 20 is hardly an all clear, and if the market unwinds this week on further tariff news, or really for any reason, I would expect the VIX to spike back above 25 very quickly.
Option Order Flow was fairly mixed this past week as my Options Barometer came in at:
Monday – 5
Tuesday – 5
Wednesday – 5
Thursday - 6
Friday – 5
Events for the Week to Come
The macro calendar is fairly light this week with the highlights for most traders being fourth-quarter GDP on Thursday and February PCE inflation data on Friday. For better or worse, I would expect tariff headlines to continue to garner much of trader’s attention as we inch toward April 2 which is the start date for reciprocal tariffs on U.S. trade partners.
On the earnings front, it should be a fairly quiet week, though traders will be watching for numbers from Dollar Tree (DLTR), Lululemon (LULU), KB Homes (KBH) and more:
Open Positions
Corning (GLW) May 47 Calls – GLW bottomed three weeks ago and has been steadily rising since. I like the way GLW looks IF the market can get in gear.
Grab Holdings (GRAB) January 5 Calls – GRAB is another stock that looks way better than most and option activity has remained bullish for weeks. Much like GLW above, I like the way GRAB looks if the market can get going.
Marvell (MRVL) June 115 Calls – MRVL continues to be terrible and we need the stock to explode higher for our calls to have a chance of coming back to life.
Financials ETF (XLF) June 50 Calls – The XLF bottomed two weeks ago and has been steadily rising since. Much like most of our positions, IF the market can get in gear, I think the XLF could ramp higher.
Jets ETF (JETS) January 26 Calls (exp. 2026) – The JETS has bounced a bit from its lows, but is hardly screaming higher. Not much more to add as the sector has been hurt by economic slowdown concerns.
Starbucks (SBUX) January 110 Calls – SBUX rose marginally last week, trading mostly in-line with the overall market. Option activity remains very strong in the stock, and because we have so much time until January expiration I am going to continue to hold my position.
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