Will the market pull back ahead of today's major policy decision?
Introducing the Volatility Breakout System: A Game-Changing Trading Approach
After extensive testing and refinement, I'm excited to officially introduce my Volatility Breakout System (VBS) to all Stock Trading Alerts subscribers. This proprietary trading approach has delivered exceptional results since March 2024, capturing over 1100 S&P 500 index points with a 69% win rate, significantly outperforming traditional buy-and-hold strategies (+42.3% vs +8.9%).
What makes this system unique is its elegant simplicity. It calculates position reversal parameters based on recent price movements and generates clear signals when price moves significantly within a given trading week. There are no stop-losses - just clean reversals between long and short positions when specific price levels are reached.
Starting today, I'll be incorporating VBS signals directly into my Stock Trading Alerts. Each Monday, after market open (S&P 500 index), you'll receive the exact price level where positions should be reversed for that week, giving you a powerful directional framework for all your trading decisions.
For traders using leveraged ETFs like SPXL and SPXS, the system has delivered even more impressive results - over 121% returns compared to just 24.2% for a buy-and-hold approach with SPXL during the same period.
I've published a comprehensive overview of the Volatility Breakout System, including detailed performance metrics, how it works, and how you can best implement it. I encourage you to read the full analysis here: Volatility Breakout System: Paul Rejczak's Trading Approach.
CURRENT TRADING IDEAS (not investment advice; make your own decisions)
• S&P 500 index - Volatility Breakout System | Entry: Long since 5629.53 (Apr. 1, 2025) | Reversal: the next reversal trigger will be posted on Monday after the index opens.
The S&P 500 gained 0.38% on Tuesday, continuing Monday's rebound from the low of 5488.73. However, futures suggest a different story this morning, with the index expected to open about 0.9% lower following the ADP Non-Farm Employment Change release, which came in higher than expected at +155k (expected +118k).
Trump's tariff announcement scheduled for later today (4:00 p.m.) is creating significant market uncertainty.
Recently, investor sentiment has slightly improved, as shown in last Wednesday’s AAII Investor Sentiment Survey, which reported that 27.4% of individual investors are bullish, while 52.2% of them are bearish.
The S&P 500 rebounded on Monday, crossing the 5,600 level yesterday, as we can see on the daily chart.
Nasdaq 100: Will It Fail Its Rebound?
The tech-heavy Nasdaq 100 closed 0.82% higher on Tuesday, extending its Monday’s rebound. However, today, it is expected to open 1.2% lower, pulling back again. Support level is around 19,000, while resistance remains at 19,500, among other levels.
VIX Remains Above 20
The VIX index, a measure of market volatility, hit a local high of 24.80 on Monday, as stocks reached their new lows. It pulled back from that level, however, remaining elevated, and above the key 20 level.
Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.
Apple Testing Its Downward Trend Line
Apple (AAPL) gained 0.48% yesterday, extending its short-term consolidation. The stock continues to fluctuate above its support of $220, however, it is still failing to break the downward trend line and $225 resistance.
S&P 500 Futures Contract Pulls Back Again
This morning, the S&P 500 futures contract is trading lower as tariff fears overcome the market. Even better-than-expected jobs data couldn't lift that sentiment.
Currently, resistance is around 5,680-5,700, marked by the recent high. On the other hand, support lies at 5,560-5,600.
Conclusion
Tuesday's continuation of Monday's rebound provided temporary relief, but futures suggest this may have been another correction within the downtrend rather than a true reversal. With Trump's tariff announcement looming, market volatility is likely to remain elevated.
Here’s the breakdown:
- The S&P 500 has rebounded from last week's low but faces renewed selling pressure.
- Trump's expected broad tariff announcement today poses significant uncertainty.
- In my opinion, the short-term outlook is neutral.
- The Volatility Breakout System is currently long on the S&P 500 index.
On the launch of the Volatility Breakout System, today's Stock Trading Alert is available in its full version, and it includes the additional analysis of the Apple (AAPL) stock and the current S&P 500 position. I encourage you to subscribe and read the details today (with a single-time 16-day free trial). Stock Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Oil Trading Alerts.
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Thank you.
Paul Rejczak,
Stock Trading Strategist