SPX has an expected move of about 188 points heading into the week of March 23. We are just coming off of back to back 200+ point expected moves, but for all intents and purposes, I would say this is pretty close. There is no doubt that the expected move is still pretty elevated. FOMC was a big reason why last week was over 200 points as well.

188 points is still no joke and VIX continues to be above 25 for the 3rd straight week.

The upper end of the expected move sits around 6695. This really highlights the bearish bias in the market as this level aligns with the highs from just this past Wednesday. The lower end of the expected move is at 6317, which is slightly lower than the 6350 area I highlighted on my post on Friday.

You can see for yourself how bearish this expected move looks on the chart. For 2 weeks in a row, SPX has trended towards the lower end of the expected move. If that repeats again this week, we will be approaching a near 10% correction on SPX.

VIX has been elevated above the key level of 23 for this entire month so far. In fact, it has spent most of it above 25. Generally we see VIX spike and then die down, but this time it has been hanging around and grinding higher. This has actually been the pattern for most of the year.

As long as VIX remains elevated like this, I don’t see SPX being able to sustain any rallies.

SPX has been in a steady decline for a few weeks now and I think the scariest part of it all is the word ‘steady’. It has been a very orderly down move and the daily chart is a perfect example of that. We have not seen a ‘crash’ or a big 3% down day. We have been seeing a slow rot of 1 to 1.5% down days that often recover and then continue again the next day.

While there has been volatility, there hasn’t been panic. From my experience, markets don’t find bottoms until we see panic. I’ve been saying it for a while, but you don’t have a V shaped recovery until you have the first half of the V. I don’t think we’ve seen that first half yet, the velocity simply hasn’t been there.

It’ll be another week of big swings and lots of opportunities to make trades on both sides.

Good luck!