Triple Witching Week 2025: Expect Volatility Surge with SPY Near $300 and QQQ at Risk
Prepare for a turbulent trading week as triple witching options expiration drives volatility. The VIX spikes above 40, signaling sharp price swings in key ETFs like SPY and QQQ.
As we enter the intense week of triple witching options expiration in 2024, traders should brace for heightened market volatility. The CBOE Volatility Index (VIX), often dubbed the 'fear gauge,' has surged into the 40s, indicating increased uncertainty and potential for sharp price movements.
This week marks the rollover from June to September futures contracts, a period historically known for erratic swings and sudden reversals. The SPDR S&P 500 ETF Trust (SPY) is approaching a critical support level near its 50-day exponential moving average (EMA) around $300, a zone where bullish momentum is expected to battle bearish pressure. Meanwhile, the Invesco QQQ Trust (QQQ) faces a challenging path, needing to drop roughly 10 points to reach comparable support, highlighting potential downside risks.
Despite ongoing optimism fueled by global pandemic reopenings, rising infection rates in several states inject caution into market sentiment. Past underestimations of health crises suggest investors should monitor developments closely, as renewed concerns could amplify market swings.
SPY's price action since 2018 reflects a series of breakouts and pullbacks, with recent movements forming a bearish island reversal near the .786 Fibonacci retracement level. This pattern suggests the recovery phase may be ending. The convergence of the 50- and 200-day EMAs near $300 adds to the significance of this support zone, although on-balance volume (OBV) divergence signals waning buying interest, increasing the risk of further declines.
QQQ has demonstrated a relatively stronger bullish trend, reaching an all-time high of $248 in June 2024 following a robust V-shaped recovery. However, recent setbacks have stalled the breakout, with resistance solidifying in the upper $230s. The coming sessions will be critical to determine if QQQ can reclaim momentum or face further downside.
The Bottom Line
Expect volatile, two-sided price action throughout triple witching week, with major indices like SPY and QQQ potentially confirming bearish reversal patterns. Traders should stay vigilant and prepare for rapid shifts in market dynamics.
Disclosure: The author holds no positions in SPY or QQQ at the time of writing.
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