OVERVIEW
Apple Reroutes to India Amid Tariff Storm ⛈️

As Trump’s sweeping 104% China tariffs take effect, Apple is scrambling to mitigate the damage - by leaning harder into India. Over the past few days, at least 10 iPhone-laden flights have departed from Chennai to the U.S., as Apple rushes to fill American demand from its Indian supply line. The move comes after Apple failed to secure a last-minute exemption from the tariffs, which have already wiped around $700 billion off its market value.

Despite recent growth in India, about 80% of Apple’s manufacturing remains tied to China. Shifting significant production to India remains logistically challenging in the short term. Analysts estimate India could currently cover about 30 million of the 50 million iPhones Apple sells annually in the U.S., but it’s not a sustainable long-term solution.

The bigger issue? Trump’s “Made in America” push. Manufacturing iPhones domestically would be a logistical nightmare and cost Apple tens of billions. Morgan Stanley estimates it would take three years and $30 billion just to move 10% of its supply chain stateside.

For now, Apple is navigating the geopolitical turbulence with a blend of Indian expansion, supplier negotiations, and potential future price hikes - possibly hitting consumers globally by the next iPhone launch.

MARKET
Is The Bottom Finally In?

Yesterday’s session was nothing short of historic, delivering one of the largest intraday ranges seen in over 70 years. The market breathed a collective sigh of relief after the U.S. announced a 90-day pause on tariffs, signaling the start of what appears to be a period of negotiations with major trade partners—except for China.

Stocks surged, marking one of their biggest rallies since World War II, as investors had been desperately hoping for this move. While Trump temporarily reduced tariff rates to 10% for most nations, China was hit with a steep increase to 125%. Canada and Mexico escaped additional duties, and the European Union followed suit, announcing its own 90-day tariff pause on U.S. goods.

Despite the relief, the market is far from out of the woods. The effective tariff rate still sits at 23%, a historical high. While delays ease some immediate pressure, they don’t eliminate uncertainty—particularly with the sharp tariff hike on China still in play.

Adding another layer to the equation, fresh inflation data came in lower than expected. March CPI inflation fell to 2.4% (vs. 2.5% expected), while Core CPI dropped to 2.8% (vs. 3.0% expected). This marks the second consecutive monthly decline and the lowest Core CPI reading in four years. Inflation has cooled significantly despite ongoing trade tensions, with Headline CPI now just 40 basis points above the Fed’s 2% target.

However, it’s critical to remember that CPI is a backward-looking metric. It does not yet reflect the impact of the latest trade policy shift, leaving plenty of room for volatility ahead.

Nasdaq

The Nasdaq responded very positively, staging a major breakout above its declining 10-day and 20-day EMAs on the daily chart. This move effectively recovered almost all the ground lost over the past two weeks while also filling two gaps we had previously identified as potential voids that could get filled in a market recovery.

However, while relative volume was significant, it wasn’t quite high enough to warrant full conviction just yet. A key area to watch is the daily Point of Control (POC) near $485, which aligns with the declining 50-day and 200-day EMAs. This confluence adds extra significance—not just for a potential breakout above, but also for the possibility that any push higher may be short-lived, facing immediate supply at these levels.

It’s not massively surprising to see big tech, which the Nasdaq tracks, showing relative outperformance during a relief rally. This sector, being heavily growth-focused, has been one of the most beaten-down areas of the market. When sentiment shifts, even temporarily, these stocks tend to rebound sharply as traders and investors rush back into high-beta names.

S&P Midcap 400

The midcaps also saw a notable push with high relative volume, recovering above their 200-week EMA, which had been a significant red flag, as we discussed in yesterday’s report. However, the Point of Control (POC) for midcaps aligns closely with the declining 10-day EMA, which will likely be a tough hurdle for the MDY (midcap ETF) to overcome. Until we see any meaningful breakout above this level, MDY remains a lagging segment.

If the market does continue to push higher and a short-term bottom holds, the area most likely to show the strongest strength and highest efficiency in breakouts won’t be in the midcaps. The reason large-cap and megacap names are likely to show the most strength and efficiency in a market recovery is that large institutions tend to accumulate positions in these stocks first when they start getting back into the market. These stocks are more liquid, have greater market depth, and are generally seen as safer bets during uncertain times, which makes them the go-to choice for big players looking to deploy capital.

Russell 2000

The small caps have a similar volume x price profile to the midcaps, as both tend to move in tandem. We can see how much the IWM (Russell 2000 ETF) has struggled, with the weekly chart still showing a rejection at the declining 200-EMA, which aligns with a dense level of overhead supply that small caps need to overcome before we can even begin discussing any type of long exposure here.

The high relative volume on the weekly candle is promising and may signal capitulation, especially as we see the low of the weekly candle coinciding with a bounce off a dense demand level. While this setup suggests some potential for a recovery, we still have a lot of work to do before we can confidently enter long positions in this segment.

DAILY FOCUS
Volatility Remains Elevated – Don’t Rush

In a market flooded with volatility, it's easy to get caught up in the excitement of a relief rally. Rushing into trades without confirming the structure and strength of the move is a recipe for disappointment. Here’s how to approach this environment with clarity and an edge:

Wait for High Relative Volume and Range Breakouts

The first critical condition for entering a trade is seeing abnormally high relative volume. This signals that there’s actual institutional involvement behind the move—not just short-term, retail-driven action. It’s not enough to see a one-day surge or a spike in volume without context. Volume must break through a range that has been established over weeks or months, suggesting that the market is ready to sustain a directional move.

In addition to volume, look for clear breakouts above established levels—we're trend traders, not short-term gamblers. If a move immediately retraces or forces you to exit within a day or two, it’s not a breakout but a false signal. The market needs time to build momentum, and this takes more than a 1-2 day surge. Patience is critical.

Use the Bounce to Track Relative Strength Leaders

This current bounce provides a great opportunity to track the real relative strength (RS) leaders—the stocks and sectors that are holding up the best during the sell-off. These stocks are the true market leaders that will move first and likely lead the broader market when a recovery happens.

Look for stocks that exhibit the following parameters:

• Lowest Relative Retracement from Highs: During market sell-offs, some stocks hold up much better than others. RS leaders are those that retrace the least from their highs, signaling resilience. These stocks will likely continue to lead when the market shifts, as they are already showing strength under pressure.

• Linear Price Action: Watch for stocks that move in a relatively linear, smooth fashion, with steady, continuous price action rather than volatile swings. These are typically stocks that are seeing consistent demand without erratic fluctuations, indicating stronger investor conviction.

• Trend Continuity: The stocks that are setting higher lows and showing higher highs are those that are structurally bullish and leading the market. These stocks will typically continue to outperform the broader market during uptrends.

Focus on Liquidity and Institutional Flows

Don’t forget that large institutions tend to accumulate positions in large-cap and megacap stocks first during rallies. These stocks are liquid, they have more depth, and they offer institutional traders a much easier path to enter and exit positions. For you, these stocks often provide clearer trends and more tradable setups during times of uncertainty. Look for breakouts and consolidation patterns in these names first.

Track the VIX for Context

Remember that the VIX, or volatility index, is your barometer for broader market fear. If the VIX remains elevated, it's an indication that market participants are still hedging for volatility and uncertainty. Until we see the VIX consistently subside (below 20), it’s unlikely that we will see smooth, consistent trends across the market. The VIX is your reminder to remain cautious and let the market come to you rather than chasing moves.