EB Daily Market Report - Tuesday, March 11, 2025
This will be an abbreviated report, but I wanted to pass along a couple changes I'm seeing today.
First, the S&P 500, at its low today of 5626.88, had lost 10.07% from its all-time high. Technically, that's the definition of a correction. I feel good about having made that call and sticking with it, while the S&P 500 stubbornly kept trying to set all-time highs throughout the early part of 2025.
Second, we're FINALLY seeing a bit of bearishness amongst options traders. This has been badly lacking, in my opinion, but the intraday equity only put call ratio ($CPCE) readings at cboe.com are beginning to show that the current selling is wearing upon those who have remained bullish. I've started taking screen shots each day of the hourly CPCE readings. The following represent Friday, Monday, and today:
Friday
Monday
Today
You can see the cumulative CPCE in the right hand column. We started out similar to both Friday and Monday, but the cumulative CPCE has been rising all day long, indicative of an options crowd that's started to pour into put options. Today's reversal and rally are catching all of them off guard. Whipsaw action is so frustrating for everyone, both longs and shorts.
So is this it? Is this the bottom?
It's very difficult to make that call right now, though my guess at this point is that we'll likely see a lower low later in March, either tomorrow with bad news on inflation, or maybe after the Fed meeting or maybe to simply close out the month. I just don't think we have enough information. In my opinion, we're seeing short covering today ahead of tomorrow's very important CPI report. Even with the beautiful reversal, the VIX still remains quite elevated at 26.35 (at last check). If the February CPI report comes in hotter than expected, we may find ourselves right back into the downtrend.
Also, keep in mind there's another hour left in the trading day. If I've learned one thing about the stock market, it's that when the VIX is in the 20s and above, absolutely ANYTHING goes. Trading isn't rational. So continue to be very careful. I know everyone wants to nail the exact bottom, but how much risk are willing to take to try to do that? A hot CPI number tomorrow morning and we're likely to have a hot mess in the stock market.
Happy trading!
Tom