It would seem investors have been too complacent about the upcoming FOMC meeting, which will need to change. As I explain below, that means more puts will need to be bought and that will weigh heavily on stock prices.

S&P 500 (SPX)

Today was ruthless. The S&P 500 started higher by more than 1% and finished the day down by more than 1.4%, a 2.6% Intraday reversal in a nearly a straight line drop. The index gave back all of the gains from Tuesday and closed at 4,393. The next level of support I am looking for is 4,350.

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NASDAQ (QQQ)

It was much worse for the NASDAQ, with the Qs trading higher by almost 2%, and finished the day down almost 2.1% to close at $334. Ultimately the Qs failed four times at the $348 level and then just melted through support at $336. The next support level appears to be around $327.

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VIX

It seems odd that heading into Powell speaking, the VIX was trading down to start the day. It didn’t take long for that to change. Once the VIX traded up, it was over. The VIX is too low, heading into one of the most pivotal FOMC meetings. From listening to Powell today, the odds of a 50 bps rate hike seem like the base case. On top of that, the Fed is likely to announce the beginning of QT. So it would seem that investors will need to put hedges in place going into this meeting, which means the VIX will rise.

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A rising VIX will weigh on stocks, and as I explained in this article, I wrote on the SpotGamma website if we are entering the time where people start putting hedges back on, the market has further to fall.

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Nvidia (NVDA)

Nvidia was crushed today, and it fell below that significant support level at $207. The RSI is still trading around 33.7, which means there is further to go here. Whether the RSI makes a lower low or not will have a lot of meaning. We know a bottoming process has started if the RSI makes a higher low. If it makes a lower low, the stock is nowhere near a bottom. I would look for support for $180.

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Adobe (ADBE)

I cautioned about Adobe and support around $415. It is very close to breaking that support now. Once that support fails, $390 is the next logical spot. But after $390, there could be a massive drop.

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Lam Research (LRCX)

Lam Research had results last night; they missed just about everywhere I saw. I know there are supply issues for them, but still. The stock is at a point where things may be about to get a whole lot worse. It has been hanging around the $470 level forever, with a break sending shares to the $350s.

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