March 14, 2025

Markets:

Stock futures rose on Friday after a sharp decline in the previous session pushed the S&P 500 into correction territory.

Investor sentiment improved as a potential government shutdown appeared to be avoided. Senate Minority Leader Chuck Schumer stated he would not block a Republican funding bill, easing market concerns.

On Thursday, the S&P 500 dropped 1.4%, bringing its total decline to 10.1% from last month’s record high, officially entering correction territory. The Dow fell 1.3%, while the Nasdaq slid about 2%. The Nasdaq has now dropped more than 10% this year, while the small-cap Russell 2000 is down nearly 19% from its recent peak, approaching a bear market.

This downturn marks another chapter in the market pullback over the past three weeks, driven by ongoing economic uncertainty and increased volatility. All three major indexes have lost over 4% this week.

Friday’s consumer sentiment report will cap off a busy week of economic data, including key inflation readings. Investors are also looking ahead to next week’s Federal Reserve meeting, where futures pricing suggests a 97% chance that interest rates will remain unchanged, according to CME’s FedWatch tool.

Portfolio:

We head into today’s session with positions in QUBT, TSLL, PLTU, and APPS. The NAAIM Exposure Index declined to 68.8 this week from 75 last week, still not at full capitulation levels but nearing the 56.5 low from August 2024. Historically, these levels have signaled market reversals, similar to what we saw in August before a strong run-up. The best trading months often follow these periods of fear.

In pre-market trading, QQQ is approaching the 60-minute downtrend line that began on February 21. The 550 level on SPY was heavily defended yesterday, with two strong buying surges after attempts to break below it. This remains a key level for the markets. Additionally, ULTA and DOCU both saw after-hours dips and quick recoveries—potential signs of a character shift as earnings season has largely seen “sell everything” reactions.

One final reminder: too many traders focus on calling tops and bottoms, but trying to time them rarely works. The goal isn’t to buy the exact low or sell the exact top—it’s to ride the 80% move in the middle. That’s what we focus on.

Stay ready today. While adding positions on a Friday isn’t ideal, the pre-market setup suggests a strong opportunity. The key will be how the market builds after the open—whether we see sustained momentum or just a short-lived run-up. Be ready today.