We have a ceasefire! (apparently)

Despite some midday heroics yesterday, markets couldn’t fully shake off Monday’s direction. The S&P 500 closed down about 0.8%, and the Dow Jones lost 1.1%, extending the stock slide. The Nasdaq Composite fared better, slipping only 0.2% after a late-day rebound. Interestingly, small-caps showed a bit of spunk – the Russell 2000 eked out a 0.2% gain, hinting that some bargain hunters were nibbling on domestically-focused names. Until the aftermarket sell-off.

It was a sea of red across most sectors. Tech and industrial stocks initially led losses on tariff fears, exemplified by Teradyne’s whopping -17.1 % plunge after warning trade restrictions could slam its business. Travel stocks got hammered too – Delta Air Lines dived 7.2% after cutting its outlook, which dragged down online travel players like Expedia and hotel/cruise names in sympathy. Even telecom wasn’t safe: Verizon sank 6.7% on worries about competition and consumers tightening belts. Still, a few bright spots emerged. Airlines saw a split decision: Delta’s drop was offset by Southwest’s +8.3% surge after unveiling a new revenue-boosting fare plan. And beaten-down AI and chip stocks caught a bid – Super Micro Computer soared 10.7% to lead the S&P after a bullish analyst call, and even Tesla bounced back nearly 4% after Monday’s drubbing. In short, the bulls and bears traded punches all day, with defensives and select tech winners offering a silver lining on an otherwise downbeat day.

Volatility Index (VIX) Update

If you’re feeling whiplash, you’re not alone – the VIX, Wall Street’s “fear gauge,” is strutting around at elevated levels. It spiked ~16% yesterday to about 28 – the highest we’ve seen since late last year​. Such a jump screams that traders are on edge. In fact, the VIX curve even flipped into backwardation (near-term volatility priced higher than the future), which is fancy trader-speak for “right now, everyone’s freaking out more about the immediate future than the long-term.”

So what does that signal? Typically, a VIX that high means fear is running hot, often a contrarian indicator that a relief rally could be in the cards once the dust settles. But let’s not get ahead of ourselves – extreme fear can also beget more volatility. Sentiment is fragile, and the VIX near 28 tells us to expect big swings to continue in the short run. For today, if calmer heads prevail on the news front, we might see the VIX ease off a tad (meaning the market finds some footing). However, any fresh shocks and this fear gauge could spike right back up, keeping traders on their toes. Stay sharp, manage your risk, and don’t let the VIX shake you out of good trades – but also, don’t fall asleep on it. This market’s mood can flip faster than a coin.

Tariff Updates & Impact

Trade war drama was front and center yesterday. In an eyebrow-raising move, U.S. officials threatened to double tariffs on Canadian steel and aluminum exports – essentially turning a friendly NAFTA neighbor into a trade sparring partner​. Markets did not take kindly to that saber-rattling: stocks sold off in the morning on fears that a North American trade skirmish could further snarl supply chains and stoke inflation​. Industrial and manufacturing-heavy sectors felt the heat, and any company with cross-border business started sweating.The good news? By afternoon, cooler heads prevailed. Reports emerged that negotiations were underway to walk back the tariff threat, and officials from Washington and Ottawa hit the brakes on an all-out trade war. This partial retreat helped the market claw back losses – you could almost hear traders exhale in relief. The tariff turmoil still left its mark, though. Companies like Teradyne explicitly cited trade policy risks denting their outlook​, and the broader sentiment remains cautious. Even without new China tariffs in play yesterday, the backdrop of the U.S.-China trade tension lingered like a dark cloud, as investors know any escalation on that front could be a one-two punch to an already jittery market​. On the flip side, the tariff retreat gave a boost to certain oversold names – notably AI stocks bounced as the U.S. and Canada backed off their showdown​

Bottom line: the tariff saga isn’t over, but traders are watching closely. Every tweet or headline on trade is a potential market landmine. Keep an eye on trade-sensitive sectors (industrials, tech hardware, autos) for outsized moves on any further tariff news. In trading, “Trade wars: high stakes, but also high opportunity if you time it right.”

Ukraine-Russia Ceasefire Developments

Geopolitics served up a rare bit of optimism yesterday. Ukraine and Russia agreed to a U.S.-brokered 30-day ceasefire – a tentative pause in a conflict that’s been a major source of global anxiety. For the market, war headlines usually mean one thing: check the commodities. Sure enough, the mere prospect of peace has been nudging oil prices lower, as traders bet that calmer heads in Eastern Europe could lead to steadier energy supplies. (Case in point: analysts noted that talk of a truce was one of several factors sending crude prices down this week​.) If this ceasefire holds and even blossoms into a longer peace deal, it could ease pressure on oil and gas further – a welcome relief for businesses and consumers hit with high energy costs since the war began. In Europe, they’re already cheering: natural gas prices have tumbled, and stock markets got a nice lift in recent weeks on ceasefire hopes. But let’s keep it real – this is a 30-day ceasefire, not a full peace treaty. Investors know the situation could turn on a penny. Still, a pause in hostilities is bullish for sentiment: it removes (even if temporarily) one big geopolitical risk from the table. We saw defense stocks that had been soaring on war demand cool off a bit, while European equities enjoyed a “peace dividend” rally​. For U.S. markets, a ceasefire by itself wasn’t enough to outweigh tariff and recession worries yesterday, but it’s a positive background development. It could help with the inflation fight too – lower energy prices from a sustained peace would be a boon for global growth and could take a bite out of inflation​. In short, the ceasefire news is a constructive development for markets (and frankly, for humanity). Traders will be watching any headlines out of that region closely. If the 30-day truce leads to something more lasting, we might see an uptick in risk appetite — and perhaps a downtick in oil, gold, and other safety trades as the world breathes a cautious sigh of relief.

Key Levels & Market Outlook for March 12, 2025

After all this volatility, traders are laser-focused on key technical levels to gauge where the market might head next. The S&P 500 is hovering near a critical inflection point – it dipped below its 200-day moving average this week for the first time since 2023​, a sign that the market’s uptrend has been seriously challenged. Bulls really want to see the S&P reclaim that line (around the mid-5600s) to restore some confidence. On the downside, we’re not far from official correction territory – roughly 10% off recent highs. In fact, after three straight weeks of selling, the S&P is already about 8% off its peak from last month​. That puts the next big support in the mid-5400s (the line in the sand for a 10% drop). If the S&P breaks that, we could see accelerated selling as momentum players jump ship – but if it holds, it might mark a tradable bottom. Keep an eye on the Nasdaq too: growth stocks have been hit hard, and the Nasdaq 100 is flirting with correction levels as well. On the flip side, the Dow with its old-school industrial names has been a bit more resilient but is still well under its recent highs. And note the Russell 2000’s relative strength – small caps holding up could mean investors are starting to sniff out value in beaten-down names, a dynamic often seen near turning points. All told, these index levels will be crucial today: a bounce off support could trigger a relief rally, while a breach might invite another wave of selling. As I say, “trade the levels, not your ego.”

From a market outlook perspective, caution is still warranted but there are opportunities brewing. Economic data releases will be key in the coming days – traders are anxiously awaiting the next inflation readings (CPI and PPI) given the Fed’s meeting next week​. Any sign that inflation is cooling faster (or not) could whipsaw expectations for Fed policy in a hurry. For today (Wednesday), the calendar has some highlights: we’ll get U.S. job openings data (JOLTS) and likely some mid-week oil inventory numbers, but the big fish is the February CPI report due soon (likely tomorrow), which could be a make-or-break for this nascent market bounce. Earnings-wise, a few heavy hitters are reporting: keep an eye on Adobe and Lennar, among others, later today​. Adobe’s results will test the appetite for tech stocks, and Lennar will shed light on housing market strength. Any positive surprises from these could help turn sector sentiment around.

So how should traders position for the day ahead? Nimble and hedged is the name of the game. With volatility high and headline risks aplenty, it’s wise to manage position sizes and use tools like stop-loss orders or options to protect against abrupt moves​. At the same time, elevated fear can open up attractive entry points – a number of quality stocks are now well off their highs (some mega-caps are 50%+ down from recent peaks) and sitting at technical support. If you have a shopping list of fundamentally solid names, scaling in on dips (gradually) could pay off once the panic subsides. Remember, back in 2018 a tariff-induced sell-off proved to be a great buying opportunity, and some analysts at UBS suspect this pullback could play out similarly​. Still, until we see concrete signs of a trend reversal – like an upbeat catalyst or a clear bottoming pattern – it’s prudent to stay on defense but ready to pounce. That might mean favoring less volatile, dividend-paying sectors (utilities, healthcare) in the short run, or keeping some cash ready to deploy.

In summary, the market is at a crossroads. We’ve got tariff tantrums, a hopeful ceasefire, and looming inflation data all colliding. For March 12, expect traders to be laser-focused at the open: Will we bounce off yesterday’s lows, or break down further? Key S&P levels ~5540 (200-day MA zone) and ~5400 (correction threshold) are in play​. A decisive move above those could trigger some FOMO buying; failing to hold could invite the bears to deepen their claws. As a trader with an edge, you’ll want to watch volatility and news flow like a hawk. This is a market where intraday reversals can and do happen. My take: lean cautious, but don’t be afraid – volatility also means opportunity. Keep it informal, keep it fun (yes, even in rough markets), and stay two steps ahead of the crowd. Happy trading! 🔥

Enjoy all and most importantly, if you want to listen to this on audio check it out on my podcast:https://wisewealth.podbean.com/

Samuel Leach

www.samuelandcotrading.com