[Chart courtesy of MarketWatch.com]

1. Moving the market

Equities resumed their downward trend after yesterday’s historic rebound, which was triggered by Trump’s 90-day pause on some reciprocal tariffs. The EU followed suit by announcing a similar pause on U.S. goods.

Despite this, a 125% tariff rate on goods from China remains, with Trump expressing optimism that “a very good deal” can still be achieved. However, the markets may not be out of the woods yet. While the delay might provide some relief, it does not reduce uncertainty, and market volatility is expected to remain high.

This morning, the tech sector experienced the steepest declines, with major players like Apple, Tesla, Nvidia, and Meta pulling back sharply. This follows the S&P 500’s 9% gain yesterday, its third-largest single-day increase since World War II.

The major indexes retraced more than half of yesterday’s gains before cutting losses somewhat by midday, as the dollar weakened, and yesterday’s short squeeze showed no follow-through.

Global uncertainty pushed gold prices to a record high, marking its biggest two-day gain since the COVID-19 pandemic. Conversely, Bitcoin gave up some of yesterday’s gains but managed to retake the $80k level, while bond yields closed higher.

This period of uncertainty, volatility, and confusion is underscored by the dollar being at its lowest in two years, while gold sits at a record level.

This is a good time to watch this debacle from the sidelines.

[Chart courtesy of MarketWatch.com]

1. Moving the market

Despite intensifying global tensions, the markets edged into the green early on as traders sought a bottom after recent relentless selling.

Optimism persisted even as the European Union (EU) and China announced retaliatory tariffs on U.S. merchandise. China will impose an 84% levy starting Thursday, following U.S. tariffs of 104% on Chinese imports that took effect at midnight. The EU also approved its first set of tariffs on the U.S., starting on April 15.

Other countries joined in, announcing 25% retaliatory tariffs on U.S. vehicles. This ongoing tug-of-war has kept anxiety high on Wall Street, with the 4-day rout likely not over. The Dow has now fallen 19% from its highs.

Everything changed when Trump suddenly announced a 90-day pause on tariffs, initially dismissed as fake news on Monday but confirmed today. His 10% blanket tariff for all countries remains in effect, but he will need more time to negotiate with over 70 countries seeking direct talks.

In response, computer algorithms went haywire, pushing major indexes 8-12% higher, with the Nasdaq seeing its largest gain since October 2008. Remarkably, the S&P 500 experienced its largest ever point reversal yesterday, surpassing the record set on October 14, 2008.

While the comeback rally captured attention, the real drama unfolded in the bond market, where chaos reigned as price volatility hinted at potential malfunctions. The basis trade was in danger of blowing up, a complex concept beyond the scope of this summary, but you can read more about it here.

Bond yields spiked, especially the 2-year, the dollar retreated, Bitcoin surged past $82k, and gold had its best day since 2020.

Rate-cut expectations plunged, leaving this wild session with more questions than answers.

[Chart courtesy of MarketWatch.com]

1. Moving the market

Hopes that tariff deals with many countries could be negotiated for mutual benefit provided a brief reprieve from recent market turmoil, bringing some calm even as tensions remained. The broad market bounced back sharply as news spread that around 70 countries had contacted the U.S. to discuss alternative proposals.

After three days of steep losses and violent volatility, including the highest trading volume in 18 years and a brief dip into bear market territory (-20%), any easing of trade tensions was bound to create a relief rally. This is what we witnessed this morning, but it remains to be seen if this marks the end of the sell-off or just a temporary respite.

Unfortunately, U.S. stocks suffered a major reversal as tariff rhetoric between Trump and China intensified, pulling the indexes not only off their lofty levels but deep into the red, confirming that we indeed saw a dead cat bounce. Trump confirmed an additional 104% of tariffs on China, set to take effect at midnight, which crashed the offshore Yuan to a record low against the dollar.

The massive short squeeze, which had propelled the S&P 500 to rally 4% intraday, ended abruptly with the index closing down over 1.5% and losing its $5,000 level. Meanwhile, the Mag7 basket also suffered, having lost $5.3 trillion in market cap since its peak.

Bond yields rose, the dollar remained steady, but credit markets are starting to crack and are at their widest since November 23, as noted by ZH. If the S&P 500 continues this path, we may have a long way to go before finding a bottom.

Bitcoin lost its $80k level again, commodities were crushed, and only gold managed to hold onto any gains by the close.

Crude oil fell below $60 to a new 4-year low, suggesting that prices at the pump could drop significantly.

[Chart courtesy of MarketWatch.com]

1. Moving the market

Futures and global markets indicated another session of losses, with the S&P 500 plunging as much as 5.5% before the selling abated and market direction suddenly reversed.

Comments from Trump, which turned out to be fake news, suggested a 90-day pause in tariffs for all countries except China, sparking bullish sentiment. However, the lack of confirmation sent prices plunging again, adding to the market chaos.

Approximately 50 nations reached out to start negotiations, with some planning retaliatory tariffs. The situation remains highly uncertain, and it appears that negotiations will be more prolonged than Wall Street traders would prefer.

This is a time of extreme uncertainty, making it difficult to determine a clear market direction. Our TTIs remain deeply in bear market territory, and it’s best to observe this turmoil from the sidelines.

In the end, it was another wild day in the markets driven by headlines, leaving traders confused about the market’s direction. The Dow led the decline, followed by the S&P 500, while the Nasdaq managed a small gain.

Dip buying in the S&P 500 was prevalent as the index hit bear market territory, and the most shorted stocks soared 14.5% from low to high within 30 minutes, marking a dramatic squeeze.

Bond yields initially eased but then rallied, with the 10-year yield climbing back over 4%. Rate cut expectations plunged, the dollar rebounded, and gold lost its $3,000 level by a fraction.

Bitcoin experienced volatility, ending slightly lower but failing to climb back above its $89k level.

Opinions on the market’s next move are divided, with some traders seeing this as a buying opportunity while others anticipate further downside.

It’s a guessing game at this point. That’s why we’ll rely on our Trend Tracking Indexes to guide us on when to move back into equities.