SPY On Track To Fall Below 100-DMA For First Time In Nine Months – Retail Braces For Prolonged Volatility

The benchmark ETF is testing a critical technical breakdown. The move follows a sharp global selloff as escalating tensions in the Middle East sent oil prices soaring.

• The Dollar index rose 0.7% to its highest since January 22, while spot gold and silver prices gained over 2%.
• Strong gains in energy and defense shares were offset by declines in major technology and index heavyweight stocks.
• The Volatility S&P 500 index surged to its highest in over three months.

The SPDR S&P 500 ETF Trust (SPY) fell more than 1% in pre-market trading on Monday and is on track to break below its 100-day moving average for the first time since May 2025.

U.S. markets are tracking steep losses seen across Asian and European markets on Monday, as escalating tensions in the Middle East rattled investors, driving them toward safe-haven assets like gold and the U.S. dollar.

Meanwhile, both spot gold (XAU/USD) and spot silver (XAG/USD) jumped over 2% to their highest levels since January 30, while the Dollar index (DXY), which measures the greenback’s strength against a basket of six key currencies, rose 0.7% to its highest since January 22.

At the time of writing, the Volatility S&P 500 index (VIX) surged 17% to its highest since Nov. 20, 2025.

Sector Rotation: Energy, Defense Stocks Rally, Tech Slumps

The conflict spread across the region after joint U.S.-Israeli strikes on Iran killed Supreme Leader Ayatollah Ali Khamenei on Saturday. Disruptions in the Strait of Hormuz — a key corridor for roughly 20% of global oil trade — pushed crude prices to their highest levels in over a year. Iran’s Revolutionary Guards said they targeted oil tankers and military bases in the region, prompting vessels to halt in nearby waters.

Strong gains in energy and defense shares — including Lockheed Martin (+7.8%), Chevron (+4%), and Exxon (+4.5%) — were offset by declines in major technology and index heavyweight stocks such as NVIDIA (-1.5%), Apple (-1.2%), and Tesla (-2.4%).

Cruise and airline stocks declined, with Delta Air Lines (DAL), United Airlines (UAL), Carnival Corp (CCL), and Royal Caribbean (RCL) down over 5% each.

Retail Remains Cautious Despite Bullish Sentiment

While retail sentiment for SPY on Stocktwits remained ‘bullish,’ chatter was largely ‘bearish.’

One user said that while markets may “fade” the headlines, energy volatility, and geopolitical uncertainty are likely to persist for weeks.

Another user advised against buying call options “too early.”

Year-to-date, SPY has declined 0.3%.

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