OVERVIEW

Global Markets Rattle as Over 50 Nations Seek U.S. Trade Talks Post-Tariffs📉 

President Trump’s sweeping new tariffs have triggered a wave of economic diplomacy and market turmoil. Over 50 countries, including Taiwan, India, and Israel, have reportedly reached out to the U.S. to initiate trade negotiations, hoping to avoid the full brunt of newly imposed levies ranging from 10% to 50%.

While administration officials are touting the tariffs as a strategic play to strengthen U.S. leverage on the global stage, the economic impact is already proving severe. U.S. stocks have tumbled nearly 17% from February highs, wiping out trillions in value and sparking fears that a full-blown bear market could be looming. Comparisons are being drawn to past financial meltdowns, with some economists citing parallels to the early COVID-19 panic and even the infamous Black Monday of 1987.

JPMorgan has downgraded its U.S. GDP forecast from 1.3% growth to a 0.3% contraction, anticipating a rise in unemployment to over 5%. Meanwhile, global businesses, like Italian wine exporters, are already reporting slowed sales and rising uncertainty.

Despite this, Treasury Secretary Scott Bessent insists the administration is “creating maximum leverage,” downplaying the risk of recession. Yet critics warn that the chaotic rollout — including tariffs mistakenly applied to uninhabited islands — and Trump’s own posts hinting at strategic market pressure, are only fueling investor anxiety.

MARKET
Over $11T Wiped Out From S&P 500

As of the latest data, the U.S. equities market has seen an astonishing $11 trillion wiped off its value in just the past week. To put that into perspective, this represents roughly 40% of the entire U.S. GDP. The sharp and aggressive liquidation we're witnessing is largely driven by institutions scrambling to offload their positions to meet margin requirements and some retail traders start abandoning their “buy the dip” strategy, which is only further eroding their capital.

This wave of forced de-risking has created a level of volatility not seen since the COVID-19 crash, and it has resulted in some of the most significant margin calls hedge funds have experienced in years. However, the silver lining is that this intense sell-off may be nearing its conclusion in the short term, opening the door for a potential mean reversion back higher in U.S. stocks.

Currently, we’re seeing several market metrics hitting levels typically associated with major market bottoms, which historically signals that a reversal could be imminent. That said, it’s important to remember that during a capitulation phase, markets tend to overshoot—moving farther than many expect before finally finding stability.

While a rebound seems likely in the near term, the process of repricing the market to align with a more realistic economic outlook will take time. For traders, the best opportunity to become more aggressive will come once it's clear that the worst of the decline is behind us.

Looking at last week’s data, hedge funds significantly reduced their global exposure, with North America accounting for more than two-thirds of the total net selling. Meanwhile, the retail crowd has remained largely invested in U.S. equities, holding their positions even as the market drops—adding another layer of risk to an already very volatile environment with retail actually being net buyers as of market close on Friday in the Magnificent Seven (MAGS).

The Magnificent Seven (MAGS)—Apple, Microsoft, Amazon, Google, Tesla, NVIDIA, and Meta—have been heavily beaten down at this point, with the MAGS ETF tracking these names down about 30% from their recent highs. NVIDIA (NVDA) alone has seen a nearly 40% loss YTD, representing a staggering $1 trillion loss in market value.

Nasdaq

The Nasdaq, with its focus on technology and growth stocks, has been hit by a sell-off that's been notably more intense than the S&P 500. The QQQ ETF recently broke below its Point of Control (POC), recording the highest relative volume year-to-date. This puts the index in a critical zone, where downside pressure is mounting.

Looking at the Visible Range Volume Profile (VRVP) on the right side of the chart, we can see that there’s very little volume traded below the current POC level. This suggests that if the market doesn't experience a short-term mean reversion or a capitulation event, the downside could accelerate quickly.

The next heavily traded zone is right where the QQQ has gapped down to, between the $407-$410 range. This is where many traders expecting a short-term bounce anticipate a significant influx of buying aggression. As short sellers begin to exhaust themselves, they may start to close positions, potentially providing the relief needed to counter the current downward pressure.

S&P Midcap 400

The midcaps are currently testing a critical level that aligns closely with both the 200-EMA on the weekly chart and the densely traded Point of Control (POC) at $474. This is an area we’ll be monitoring closely, as on Friday, the POC provided some short-term relief, allowing the MDY (MidCap ETF) to retrace higher and move back above its 200-week EMA.

As of this morning, while we’re seeing this key level being breached, we’re not yet convinced that the same level of aggressive selling seen last week will persist. The pressure could be easing, and we may be witnessing a potential turning point for midcap stocks if the selling doesn't intensify further.

Russell 2000

The small caps are currently approaching their own Point of Control (POC) level at $168 in the IWM ETF, which has historically acted as a significant reversal point. Given its track record, we expect this level to provide short-term relief for small-cap stocks. It’s important to note that markets rarely move in a straight line, whether to the upside or downside.

DAILY FOCUS
Cash Is King- You Don’t Need To Be First

In the current market environment, patience is paramount, and the old adage of "cash is king" has never been more relevant. While the urge to chase the market can be tempting, especially with the volatility we're witnessing, it's crucial to recognize that you don't need to be the first to act in order to achieve success.

With significant market turbulence and liquidation events happening across multiple asset classes, it's easy to get caught up in the rush. But it’s important to remember that timing is everything, and jumping in too early can result in unnecessary losses. Instead, focus on maintaining liquidity, waiting for the market to give clearer signals, and positioning yourself when the risk/reward is more favorable.

We are once again potentially witnessing the setup for a short-term mean reversion higher, as we’re seeing peak fear and euphoric panic running rampant in the market. This level of emotional volatility often triggers short-term reversals, as markets tend to overshoot in both directions during times of heightened fear and uncertainty. However, while these mean reversion moves can present opportunities for quick trades, this is not something we actively seek to trade.

The reason is simple: swing trading in this environment carries exceptionally low probability. Even in the best of market conditions, where volatility is more controlled, a win rate above 40% in swing trading is considered impressive. In the current climate, with such wild swings and unpredictable moves, the risk-to-reward profile is skewed against traders.