April 1, 2025

Markets:

U.S. stock futures declined on Tuesday as investors awaited clarity from President Donald Trump on his tariff policy rollout. The day also marked the start of the second quarter after a turbulent first quarter.

The White House is expected to announce reciprocal tariffs on goods from nearly all countries on Wednesday. Investors had hoped for a more targeted approach in implementing the levies.

According to The Washington Post, the Trump administration is considering imposing tariffs of approximately 20% on most imports into the U.S. However, the report—citing three sources familiar with the matter—emphasized that no final decision had been made.

Uncertainty surrounding these policies has sent stocks on a volatile ride. On Monday, the S&P 500 briefly hit a six-month low before rebounding. For the first quarter, the index dropped 4.6%, while the Nasdaq Composite fell 10%, marking the worst quarterly performance for both since 2022. The Dow declined 1.3% over the same period.

On Tuesday, traders will be watching the ISM Manufacturing Index for March, along with reports on February’s job openings and construction spending.

Portfolio:

There's an old saying in trading: "Sell the event." Historically, markets tend to sell off ahead of major events, only to rally once the uncertainty clears. With that in mind, the aggressive selling of the VIX yesterday signals that investors are beginning to see value. The setup for Q2 and Q3 now looks incredibly promising, despite the rough first quarter.

Markets battered some traders into submission, but we believe a chase higher is coming soon. Once again, the SPY held firm at the 550 level, reinforcing a key support zone. Unless that level breaks and holds, it's tough to argue for a bearish case in this market. While we remain prepared to trade from the short side if necessary, a confirmed break below 550 is needed before considering that scenario.

Throughout Q1, algos reacted sharply to headlines, triggering massive swings. However, we anticipate a shift in Q2, where fundamentals will play a larger role. Our long-term members know our stance well—we've always believed that the Federal Reserve is the ultimate driver of bull and bear markets through its interest rate decisions.

Government policies can cause temporary but dramatic market disruptions. In rare cases, extreme uncertainty can fuel a self-fulfilling prophecy, leading to deeper declines. However, unless the Fed abruptly reverses course and raises rates again, we believe the current market correction—despite its volatility—will be short-lived. Within a matter of weeks, the market should see a massive price shift, setting the stage for a monster move.

As we enter today’s session, we hold no open trades. We’re keeping our exposure light while monitoring the 550 level on SPY and awaiting Wednesday’s tariff announcement. But make no mistake—we’re ready to attack this market, especially with Q2 earnings season approaching.

In our humble opinion, this quarter will be one of our best trading opportunities of the year—and we intend to capitalize on it with force!