The S&P 500 and the ETF tracking it, State Street SPDR S&P 500 ETF Trust (NYSE:SPY), experienced a historic bout of intraday volatility on Monday as a sudden military victory claim from President Donald Trump triggered a massive short-term rally, even as the broader market breached a technical level that historically precedes a bear market.
A Historic Options Squeeze
The most dramatic action occurred in the options market. By 2:10 p.m. ET, with oil prices near $120 a barrel and the S&P 500 down over 2%, the $675 strike SPY call options had withered to just $0.02 per contract.
However, the market inverted instantly at 3:20 p.m. ET following comments from the White House. By 3:30 p.m. ET, those same calls were trading at $4.95—a staggering surge of 24,650% in roughly 80 minutes.
According to data from The Kobeissi Letter, a $1,000 investment at the afternoon low would have grown to $247,500 by the close.
Trump Declares Victory
The catalyst was Trump’s signal that the ten-day conflict with Iran had reached a turning point.
“I think the war is very complete, pretty much,” Trump stated, adding that the U.S. campaign had successfully degraded Tehran’s military infrastructure.
“They have no navy, no communications, they’ve got no air force. Their missiles are down to a scatter.” Trump further noted that the operation is running “very far ahead of schedule.”
The 20% Technical Warning
Despite the afternoon euphoria, institutional analysts remain on high alert. The SPY closed below its 100-day and 20-week moving averages for the second consecutive session.
Chief Market Strategist at HB Wealth, Gina Martin Adams, noted that this breakdown has occurred only eight other times in the last decade. Historically, such a breach is a precursor to deeper pain; a similar failure of this floor in February 2025 triggered a nearly 20% market crash.
While Trump’s comments provided a reprieve, the index remains trapped under this key trend level, leaving the door open for a full-scale correction.
The SPY and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq 100, respectively, closed higher on Monday. The SPY was up 0.88% at $678.27, while the QQQ advanced 1.34% to $607.76.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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