WHITE HOUSE PRESS SECRETARY SAYS 104% TARIFFS WENT INTO EFFECT ON CHINA; ADDITIONAL TARIFF WILL BE COLLECTED STARTING APRIL 9

Our Lean

The bonds are signaling a credit crisis. And the price action after the ES and NQ made their highs was exactly what we’ve been seeing for weeks — big upside false starts. As I’ve said many times, Trump is trying to push the US economy into a recession. In the last few weeks, I’ve seen a lot of analysts saying that because of the tariff announcements, the risk is now skewed for four rate cuts by the end of the year. There’s massive deleveraging going on, any source of liquidity is being tapped… hedge funds have been liquidating US Treasury basis trades furiously.

Article: Hedge funds at the heart of Treasury market turmoil as basis trades unwind

Yesterday’s lean never lined up with the big gap and the rally up to 5305.25. I tried shorting it a few times but gave up, and as soon as I did, the ES and NQ started to tumble as the Trump/China tariff headlines hit the tape. As the day wore on, so did the index markets. After the MIM went from $700 million to sell to $3 billion to sell, the futures continued lower, and the PitBull called me and told me he bought some SPY calls.

I didn’t say anything right away, but I came back at him and said, “Why are you buying calls on such an ugly close with the China tariffs coming tonight?” He called me back and thanked me for getting him to get out when the ES was down 70 points and then fell another 30. That said, with as crazy as this is, who’s to say the ES won’t be 100 points higher in the morning? It’s really that crazy.

I think Trump is starting to feel the heat about the stock market selling off. The quiet slowing things down is getting louder and louder — and some of it is on the inside. While I’m writing this, the ES just rallied 80 points.

Bitcoin just traded 76,000 and the bonds are down another point and a half. Today we have one economic release — Wholesale Inventories at 10:00. Richmond Fed President Tom Barkin speaks at 11:00, and the March FOMC minutes are at 2:00.

I have to be honest, after a 393-point drop from the day high to the early Globex low, we could continue to bounce. But the headlines after the tariffs coming from China may shake the ES again. Let’s face it: the charts look terrible. But it seems like after every big selloff, there’s a good-sized bounce — but it’s after the bounce you have to worry about.

I’ve talked about the inverted yield curve and how there was only one occasion that the US didn’t fall into a recession. With the bonds down another point and a half, that looks like it’s coming to roost.

From Stock Traders Almanac

Bounce Fails After 2-Day 10% Rout Wait for Fatter Pitch

Good news. Six months from now this tariff tantrum should be behind us. But the history of these crashes is not the kind of company we’d like to keep. All previous instances occurred during bear markets, recessions and/or war.

The first three occurred during The Great Depression. Two revolved around WWII, one at the outset and the other during the aftermath. One was the Crash of Black Monday on October 19, 1987. Two came two weeks apart in November 2008 during The Great Financial Crisis and the last one was in March 2020 at the beginning of Covid.

This too shall pass. But it’s not likely over yet. We are waiting on let’s make a deal with China, rate cuts from the Fed, volatility to dry up and the selling pressure to be exhausted. If you could put away your phone and turn of the TV for six months, it probably wouldn’t be a horrible idea. The time to buy over the next several weeks and months will present itself. For now, sit tight and keep your powder dry, the bear has reared its head and recession is quite possible.

MrTopStep Levels:

How to read MTS Levels

Guest Posts — Polaris Trading Group

Prior Session was Cycle Day 1: Morning gap up rally fulfilled DTS Briefing 4.8.25 target zone (5225 – 5250) where price stalled and reversed against the Prior High. Violation of the 5150 Line in the Sand (LIS) accelerated the velocity of the afternoon decline, fulling downside target zone (5050 – 5015) ultimately setting 4940.50 as Cycle Day 1 Low.

 “Tale of the Tape”…There was nowhere to hide from the onslaught of persistent selling pressure. Range for this session was 365 handles on 2.320M contracts exchanged.

PTG Glossary

FREE TRIAL link to PTG/Taylor Three Day Cycle

Reframing Negative Beliefs into Empowering Ones

For a more detailed recap of the trading session, click on this link: Trading Room RECAP 4.8.25

…Transition from Cycle Day 1 to Cycle Day 2

Transition into Cycle Day 2: Currently VIX = 52 is rivaling the Covid19 decline with breath-taking intraday swings. 

China Tariffs (104%) go into effect @ 12:01 April 9th. Markets will remain “on-edge” for the foreseeable future, hence, “The Selling Will Continue Until Morale Improves!” 

Morning bounce that does not hold bid infers the frailty of the current market sentiment. 

Today is CD2, bulls have a chance to squelch the selling and stabilize price action, but it is going to take a monumental effort with the $Risk-Off selling that is permeating the markets.

Of course, nothing changes for PTG…Simply follow your plan. Take only Triple A setups and manage the $risk. ALWAYS HAVE HARD STOP-LOSSES in-place on the exchange.

PTG’s Primary Directive (PD) is to ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE.

As such, scenarios to consider for today’s trading. 

Bull Scenario: Price sustains a bid above 4940+-, initially targets 5065 – 5125 zone. 

Bear Scenario: Price sustains an offer below 4940+-, initially targets 4890 – 4840 zone.

PVA High Edge = 5268    PVA Low Edge = 5065         Prior POC = 5174

Prior Session was Cycle Day 1: Morning gap up rally stalled and reversed on a test/rejection of the prior session’s 10 am “spike-high” (18357.25). Violation of the 17800 Line in the Sand (LIS) accelerated the velocity of the afternoon decline, setting 16973.50 as Cycle Day 1 Low. Range was a whopping 1384 handles on 940K contracts exchanged.

 …Transition from Cycle Day 1 to Cycle Day 2

Transition into Cycle Day 2: MAGS-7 took it on the chin yet again, as large fund liquidation continues unabated. This is what happens when there is an overweighting of the same stocks in investors portfolios.

To whom are they going to sell to? You guessed it…To each other until the selling finally stops. Round and Round on the Merry-Go-Round. 

Normal for a CD2 would be for some balancing and consolidation to squelch the current momentum selling.

Of course, nothing changes for PTG…Simply follow your plan. Take only Triple A setups and manage the $risk. ALWAYS HAVE HARD STOP-LOSSES in-place on the exchange.

PTG’s Primary Directive (PD) is to ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE.

As such, scenarios to consider for today’s trading. 

Bull Scenario: Price sustains a bid above 16975+-, initially targets 17230 – 17325 zone. 

Bear Scenario: Price sustains an offer below 16975+-, initially targets 16785 – 16600 zone.

PVA High Edge = 18336     PVA Low Edge = 17626         Prior POC = 18016

Thanks for reading, PTGDavid

ES -Week to Week

The bull/bear line for the ES is at 5056.50. This is the key level to watch for directional bias today. Holding below this line keeps pressure on the downside while reclaiming and holding above it would be a sign of strength.

Currently, ES is trading around 4999.25, indicating continued bearish sentiment below the bull/bear line. If this weakness persists, the lower range target of 4830.50 comes into focus. A sustained breakdown below that level opens the door for a deeper move toward support at 4617.75.

On the upside, the immediate resistance to overcome is at 5012.25 (prior close level), followed by more substantial resistance at 5126.50. If buyers regain control and price can reclaim 5056.50, the upper range target of 5282.50 becomes the next area to watch, with further resistance above at 5301.75.

The trend remains bearish below 5056.50, and bulls must show strong follow-through above this level to shift the momentum. Until then, short setups at resistance levels or breakdowns below key supports remain favorable.

NQ – Week to Week

The bull/bear line for NQ is at 17,405.30. This is the pivotal level that separates bullish from bearish bias. Currently, NQ is trading around 17,240.50, indicating the market remains under bearish pressure below this threshold.

If the price stays below the bull/bear line, we anticipate continued downside action. The lower intraday range target is at 16,525.80. A breakdown below this level could open the door for a move toward deeper support at 15,698.00.

On the upside, reclaiming 17,405.30 would shift the tone more neutral-to-bullish, potentially targeting resistance near 17,665.00 first. If momentum continues, the next upside objective is the upper intraday range target at 18,284.80. Additional resistance stands higher at 18,357.90.

The trend remains bearish while price holds under 17,405.30. A sustained move above would shift sentiment to neutral and open room for retracement higher.