As March winds down, SPY (S&P 500 ETF) is starting to feel the pressure. After weeks of range-bound price action and mixed sentiment, we're now seeing a more defined shift to the downside. The market reacted negatively following the release of the PCE inflation data, and the looming April 2 tariff rollout has added another layer of caution. What looked like indecision last week is now giving way to early-stage bearish follow-through, as SPY closed at $555.66, down over 2% on the day.
While the PCE report didn’t bring any shocking inflation surprises, it didn’t ease concerns either. Combined with geopolitical risk and trade-policy uncertainty, the market seems to be saying: better safe than sorry. This explains the pullback in risk assets across the board. But it’s not panic—we’re seeing controlled selling, not capitulation. Still, this shift is enough to keep swing traders and investors on alert, especially with SPY breaking back below its 200-day moving average.
What’s becoming more noticeable is the uptick in volatility. With several critical catalysts between April 2 and April 5—including the implementation of auto tariffs, the ISM Manufacturing report, and the nonfarm payrolls—market participants are beginning to de-risk. That might mean rotating into defensive sectors, trimming long exposure, or using hedging strategies like puts or spreads to protect gains. If volatility continues to pick up, expect more choppy price action and a possible increase in intraday swings.
For now, the path of least resistance looks tilted slightly lower. Traders should watch for a retest of SPY’s support near $550, with the next key level around $545 if selling intensifies. On the flip side, a sharp reversal or dovish policy tone next week could spark a relief bounce. But until then, it’s smart to stay flexible, stay hedged, and let price lead the way.
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