Daily Market Recap: April 24, 2025

Major Index Performance

• S&P 500: 5,484.77 (+ 2.03%)
• Nasdaq: 17,166.04 (+ 2.74%)
• Russell 2000: 1,957.59 (+ 2.00%)

The S&P continued its grind up with another 2% gain. Implied volatility edged down slightly with the VIX closing at 26.46. The VIX term structure has yet to come out of the backwardation that’s been in place for 14 sessions now.

Earnings are in full force, but likely having little impact. There are greater macro forces acting on the market in the form of global trade concerns, looming recession fears and declining economic data and consumer sentiment. The greatest win for the market this week is the news that Fed chair Powell will apparently keep his job.

Macro Assets Overview

• Crude Oil (CL): 62.81 (+ 0.87%)
• Gold (GC): 3,361.00 (+ 2.59%)
• USD Index (DXY): 99.26 (- 0.58%)
• Bitcoin (BTC): 93,499.44 (- 0.21%)
• 10-Year US Treasury Yield: 0.43% (- 1.87%)
• TLT (20Y Treasury ETF): $88.24 (+ 1.05%)

The equity markets feel suspiciously boyant considering the larger macro picture remains just as gloomy as the beginning of March, when the correction started.

The USD sell off in light rising interest rates and the run up in gold remains the most concerning macro trend of late. It looked like the trend may reverse with a massive -4.43% reversal in gold this week. Today’s 2.59% gains put us back over the 5D moving average, which its closed below on once since the up-trend began.

Meanwhile the dollar fell against major currencies.

Top Headlines

• Donald Trump to exempt carmakers from some US tariffs — Financial Times — Financial Times
• Chipotle misses revenue estimates, gives more cautious outlook as it sees ‘slowdown’ in spending — CNBC — CNBC
• Top Trump aides urged president to tone down attacks on Jerome Powell — The Washington Post — The Washington Post
• Elon Musk bankrolled a $100M climate contest. Now critics say it’s ‘tainted.’ — Politico — Politico

Volatility Snapshot

• VIX (CBOE Volatility): 26.47 (- 6.96%)
• VIX/VIX3M Ratio: 1.00 (- 1.40%)
• S&P 22-Day Rolling Std Dev (Annualized): 48.66% (+ 0.28%)

Implied volatility remained high despite the VIX dropping for the 3rd consecutive day. The VIX term structure’s continued reluctance to drop out of backwardation signals the options markets are not fully buying the story that we’re fully out of the woods.

Positive bullish confirmation will come as sustained action below 1.0 on the VIX/VIX3M ratio. A clean break and sustained move above 5500–5560 in the S&P. This would also be a move outside of the down-channel that we’ve been in since late February-March.

Volatility Forecasting & Regime Models

Volatility forecasting models show a continued predicted decline. The HARQ model remains the most conservative with a 189 point range. The GARCH model is still looking at 441 points, reflecting a heightened sense of risk still in the markets.

The Markov model continues to predict a bear rally at 88%. This was also the reading we had in the major corrections in 2011 and 2018. Extreme volatility throws off models like this.

One noteworthy point is that April 2025 (with a annualized volatility of 57%) has been more volatile than any single month in the bear market of 2022 (peak in 5/2022 at 31%). The current S&P rolling 1-month sigma is 2.99 and we peaked at 2.09 in May of 2022.

Why is this significant? It may not be, but its interesting to note that the market is becoming more volatile. The move this month is higher than any correction in over 20 years. The last two times we high the 2.99 sigma is March 11, 2020 and Sept 29, 2008. Both times we continued much higher. Whether we will now or not is anyone’s guess.