Market Update: Thursday, February 20, 2025

The big dip at the open gets bought up again, but can we end the Monthly OPEX week on solid footing?

Disclaimer: These are my learnings and opinions only, not financial advice. If you are newer to trading, please read my Getting Started guide to understand the terminology and tools I use. You can also follow me on X where I share some of my trades in real-time.

Market in Review

After Hours Market Update video (Please like and subscribe! I recap today’s action and review some interesting charts).

I’ve added a brief written recap below:

SPX/ES: Yesterday, I mentioned my trading Spidey-sense was tingling when /ES hit the sweet spot top: “Since VIXpiration was today and Monthly OPEX is Friday, I wouldn’t be surprised if we dripped lower to the bottom of that red-line megaphone in the /ES chart above, which would take us to /ES 6115. Along the way, you have 6147 (200SMA on 15 min chart) and 6128 (8EMA) as supports, followed by 6098 (20SMA). If we got there, I’d definitely add some longs for a bounce.” This is actually exactly what happened today.

After news about cutting the Pentagon budget by 8% came out around 3pm ET yesterday, we started our drop to 6147 (my intraday bull/bear line — the blue line above). At the open today, /ES dropped hard through the 8EMA (6125) to the bottom of that red-line megaphone (6115). We then dipped below that and almost hit the 20SMA (6098) before bouncing. This level also happens to line up with the gap-down open (pink box on the chart above) after the DeepSeek fears on Sunday, January 26. I had my watchlist of hot names I’ve been waiting on a pullback to buy into — PLTR 0.00%↑ NBIS 0.00%↑ TEM 0.00%↑ APP 0.00%↑ CRWD 0.00%↑ HOOD 0.00%↑ — and started positions in each. We bounced nicely and got back inside this megaphone pattern, but closed the day below my intraday bull/bear line. With tomorrow being Monthly OPEX, I’m still cautious. This megaphone pattern can play out in a couple ways, but it still looks bullish for the time being.

/ES is above the 8/20, but needs to get back into the sweet spot range. I’ll get more bearish if we break solidly below 6098 (20SMA).

As a side note, news came out after the close today that the Pentagon news was false, so take that FWIW.