Floating Into Powell's Beak - Mar. 18, 2025

My Journal

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Fri. Mar 14

In the morning chat I reiterated on why I loaded up longs toward Thursday’s close. Rationale was: https://machinaquanta.substack.com/p/buying-when-no-one-wants-to-mar-13.

I took my victory lap on Twitter, instead of Substack, as I want to appear professional to you fine folks on Substack. The shorts took a beating on Friday in the gap up.

Bender saw continued stabilization in the morning so I let the longs do their work for the rest of the day. I did update midday that I did see some upcoming weakness but I did not act on it personally. Momentum was very strong to the upside and I didn’t want to cut that short. However, by Sunday we did see a small gap down that recovered quickly on Monday.

Mon. Mar. 17

Monday, the 2nd green day. My ear to the ground I sensed traders in various chat rooms were getting anxious to trade something - chasing the longs. However, I was a bit nervous about longs as Bender showed upcoming weakness again. I’ve mentioned that seasonally I don’t expect much of a rally until about April H2. Other minds seem to think the same but based on different underlying theories. Anyway, this was my ramblings to myself on Monday morning:

And Monday before close my alerts:

My favourite setups are when Bender and SPX diverge. It is like clockwork to see the gap up/down occur contrary to what everyone expects. I may be boring with trading SPY/ES/SPX but it sure is fun to see it happen. Fun and profits for you too is my hope.

Once again they rammed SPX into the close while Bender signalled sell. So with that, into the close I loaded up on some April puts just in case. I looked for 20-30 delta, it looked reasonable. Below is what I mean by Bender and SPX diverging - the rubber band stretching.

Tue. Mar. 18

Tuesday morning, Bender signalled to me that things were about to get a bit worse. Starting to see patterns emerge now?

For the reason above, my first alert I could type was to keep puts (if had any).

The rest of Tuesday can be summarized in the picture below. Like clockwork here we are down 75 handles from our entry, which actually is pretty tame compared the +100 handle days we’re used to seeing. I closed half the puts at 5610 on SPX and left the rest to feed Powell’s beak this Wednesday. Like some of you, I have my own PTSD from FOMC meetings, namely the Dec. 18, 2024 FOMC meeting. By the end of the day Bender’s sell signal had diminished considerably from the morning. So selling half the puts seemed like the right idea.

Where did I get 5610 from by the way - from this great trader here → https://yamtrades.substack.com/. I enjoy his research and his levels are consistently actionable. I hope to do a podcast with this trader for you if he will let me!

GEX, below, shows we’re still in a very volatile environment (GEX is near 0) and we’ve seen bounces in these areas previously. Just something we need to watch for patterns as they arise, keeping in mind this is has been a bounce area.

Source: https://squeezemetrics.com/monitor/dix

Today was Vixpiration day which may have contributed to some of the increased volatility. Selloffs have happened around this date for the past few expirations. Vixpiration and Opex can be inflection dates in the market so they are notable. If you’re not convinced see the picture below from "where-are-we-going-mar-4-2025". The yellow lines are Vixpiration dates.

Exhibit 1: SP500/Treasury 'spread’ compression/expansion

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