Wednesday could mark a turning point for an equity market that has withstood everything being thrown at it. BTIG’s Jonathan Krinsky noted that futures and options contracts on the Cboe Volatility Index (VIX) expire later in the day. These events aren’t as widely followed as expiration days for S & P 500 futures and options — which have a history of leading to volatile trading as investors rush to close out positions. However, VIX expirations have proven to be inflection points for the stock market, according to Krinsky. “Over the last year, eight VIX expirations coincided with a multi-week pause or pullback in SPX, while three coincided with bottoms,” wrote BTIG’s chief market technician. “We find that the inflection is often inverse to the prior period’s volatility performance. In this case, that would augur for an increase of volatility moving forward.” The VIX on average closed at 15 on those VIX expiration days. On Wednesday, it traded near 15.7. .VIX 1Y mountain VIX 1-year chart Stocks have taken signs of stubborn inflation and increasing global trade tensions in stride. The S & P 500 hit a record high Tuesday, putting it 4.2% higher for the year. The Dow Jones Industrial Average and Nasdaq Composite are also up 4.7% and 3.8%, respectively, in early 2025. However, these headwinds show no signs of easing, which could mean more choppy trading action ahead. On top of that, the S & P 500 has been teetering around its 50-day moving average of 6,010 — dipping below the closely watched level a few times in the past month. A meaningful break below that mark could lead to stronger selling pressure. Bottom line: Stocks may not be able to stay at these elevated levels for much longer. Elsewhere Wednesday morning on Wall Street, Jefferies upgraded STMicroelectronics to buy from hold. “We believe Q1-25 represents the bottom of this correction cycle for STM’s revenue and gross margin,” analyst Janardan Menon wrote to clients in a Wednesday note. He said he expects “a small improvement in Q2 followed by stronger rebound in H2-25.” STMicroelectronics is a European semiconductor contract manufacturer and designer that is actively traded on the New York Stock Exchange.
Options market event Wednesday could mark a turning point for stocks
Feb 19, 2025
