We’ve reached the point in the market where investors are abandoning ship and asking questions later.

Abandon Ship

Retail investors finally began to sell after being aggressive buyers all year long.

Hedge Funds got hit with margin calls. This is compelling since hedge funds have large short positions, but it may turn out that those were hedges and not enough. 

Under these conditions, it's not unusual to see a few big funds implode.

Extreme Fear

It was a good time, albeit a hellish two days heading into the weekend, sparking maximum fear, yet also setting off mechanical actions that only add to the market's pressure. Fear and panic remain the primary drivers.

Extreme fear reading is one of the key buy signals in the market, but it is probably not the best timing tool. It simply means that stocks could be oversold, but the market is looking for signs and signals to stem the decline and then turn higher.

Meltdown Colors

Friday's session saw each sector and extended factors down so much that the only color suitable to reflect the agony was infrared, which is the hottest color on the temperature scale.

Earnings Adjustments

First-quarter earnings estimates declined to $60.23 from $62.89, or 4.2%.

Today, we may hear comparisons to the COVID-19 crash, but the change in earnings is not even close.

Earnings Changes are making us rethink sector allocation.

I think the Fed could come into play this week, as concerns over inflation seem somewhat ridiculous compared to the growing likelihood of a rapidly slowing economy. Core inflation stalled a year ago.

J.P. Morgan (JPM) has assigned a 60% risk of a recession.

Meanwhile, Truflation reported that inflation dipped to 1.22% over the weekend.

History has seen the market bounce back from these abrupt early-year selloffs.

I hope we do not need these, but you will hear a lot about circuit breakers to stem selling – here’s how they work and the current trigger levels.

Today’s Session

Global stock markets were hammered overnight, and now all eyes are on the United States.  Well-known commentators and investors (really the same thing) are calling for a crash or economic nuclear winter.

The White House is hosting Israel's Prime Minister, Benjamin Netanyahu, today. There are elevated hopes a tariff deal will be announced.

Meanwhile, the overnight low on S&P 500 futures was 4870, which now becomes key intraday support.

A close above 5000 would be monumental. 

Comments

Thank you or your commentary, Charles. Always appreciated! Thomas M Kinser on 4/7/2025 9:49:12 AM

In 2021, I was pleased with the S&P at ~4700. Concerned, but not gonna freak out just yet. Julie David on 4/7/2025 11:37:36 AM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.