S&P 500 (SPY) Report – 03/17/23

Good morning traders!

The S&P 500 ($SPY) is trading below yesterday’s close. Let’s get into it…

The U.S. banking system is facing pressure, and market volatility could increase due to the expiration of option contracts worth about $2.8 trillion on Friday. Assurances from President Biden and Treasury Secretary Yellen, as well as a show of confidence from 11 of the country’s biggest banks injecting $30 billion into First Republic Bank, are meant to calm the situation. However, billionaire investor Bill Ackman criticized the move, stating that it could spread the First Republic default risk to the largest U.S. banks. The “triple witching” event, where equity futures and option contracts tied to individual stocks and indexes all expire on the same day, typically leads to increased market volatility. Traders may scramble to cut losses or exercise “in the money” contracts to claim their winnings, potentially leading to wild swings in the market. Despite this, some believe the injection of funds into First Republic Bank could put the bank on a better footing and stop the turmoil.

Trade Ideas:
The $SPY moved higher yesterday, breaking out of its recent sideways trend in previous trading sessions. Currently, the S&P is trading around 1% below yesterday’s close, and encountering some resistance at the 50D Simple Moving Average on a 1hr chart, as well as the weekly Value Area high. Caution is advised today, as high volatility is anticipated.

Note: Moving averages are reported from the previous trading session and will change during the next trading session. 

Friday Economic Events:
Industrial Production 9:15am ET
Consumer Sentiment 10:00am ET
Leading Indicators 10:00am ET
Baker Hughes Rig Count 1:00pm ET

Fed Speaker Scheduled:
No Fed Speakers Scheduled

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