The Stock Market Is About To Trap Everyone (Tomorrow)

So just when we thought that we were going to get some relief in the market, as the Trump administration on Friday announced that phones, computers, and chips were exempt from reciprocal tariffs, a questionable move nonetheless, but one that would absolutely rocket the market. If true, they are now backtracking that saying that there was no exception announced on Friday and that we were all mistaken. And it says these products are subject to the existing 20% fentanyl tariffs, and they are just moving to a different tariff bucket. So they're not exempt. They're just, I guess, in a different tariff category. Now we are seeing some really interesting dislocations in the market. You could see here that the dollar, my fat head is in the way. Let me move this. You could see that the dollar, which is in red and yields, which is in blue have completely parted ways. This is a very rare occasion. Something that doesn't happen a lot is has only happened a handful of times in the last hundred years. Well, really since 1973, that's when the dollar index was established, but you get the point. We take a look at some valuations here. The S and P 400 mid cap is trading below the 20 year median and is nearing that fifth percentile range in terms of price earnings valuation. So there are definitely some dislocations here that I think might be tradable and we might be able to take advantage of them. So in this video, I'm going to go through everything you need to know for the stock market coming up next week. I'm going to dive into the stock market analysis as usual. Tell you what I see on her on the horizon. Where do I think price is going in the short to midterm? And then towards the end of the video, we'll be looking at some trades to try to take advantage of this dislocation. The best trades occur when the market is dislocated in a way that seems exaggerated. So if you look across X and other social media, everyone including myself was prepping for a potential big rally, at least on Monday based on this now either false or grossly misunderstood news story that Trump exempt phones, computers, chips from reciprocal tariffs. So everyone's mind obviously goes to NVIDIA, AMD, Apple, that those companies would moon. And obviously those are NVIDIA and Apple are two of the biggest companies in the world. And if they see a massive rally, then the rest of the market is going to see a euphoric rally. But apparently there are upcoming national security tariff investigations and Trump said that we're looking at semiconductors and the whole electronic supply chain in those next investigations. So at least we will not see a likely pump based on this news here. And here's the latest on what let Nick said about the tariff exemptions. And so the president is going to come out with his policies on semiconductors and pharmaceuticals. They're going to be outside the reciprocal tariffs and he was just making sure everyone understood that all of these products are outside the reciprocal tariffs and they are going to have their own separate way of being considered the notice that went out Friday night saying that electronics, a wide range of electronics, including smartphones, including components used to make a microchips that these are now exempt from the reciprocal tariffs. Remember those products are going to be part of the semiconductor sectoral tariffs and they're going to have a special focus type of tariff to make sure that those products get reassured. So all this to be honest is mixed messaging and creating chaos, right? People thought that obviously because Trump himself said that he was looking at the bond market that because the bond market is going haywire that Trump put in that that 90-day pause on all basically every country not named China on Wednesday, April 9th. We had that drop in yields. The stock market had a record day second best day for the Nasdaq ninth best day for the SP 500. But then the next day you could see yields once again surging all the way to 4.59. It's crazy that within one week only just last week the 10-year yield gained 70 basis points. That is insane. I don't think for the for people that don't follow bonds. I don't think you know how insane that is. Obviously, we thought that on Friday afternoon when that news came out that it was because the 10-year yield started creeping back up due to a large part due to foreign countries selling their Treasuries in retaliation for these tariffs and for sure if there was an exemption on phones computers, etc, that you would have seen yields completely drop next week and you would have seen the stock market rally hard at least early in the week that may still be the case, I guess but I think a lot less likely based on what we just heard that just came out a few minutes ago as of the time of this recording. So let me dive a little bit into technical analysis and then I'll jump into some trade. So you can see here that the S&P 500 hit our target. What was our target? If you guys were watching the videos, you know that our target was the sip the 2021 highs, right? You can see that the S&P 500. It didn't the spy itself didn't exactly touch it like Futures did but we basically got there, right? That was the resistance level turn support that I was eyeing here on the S&P 500. However, if I pull up the moving averages, I want you to look at something because this does not look great. So this right here is the 50 moving average in orange and the 200 moving average in green. Now they have not crossed yet, but if they cross historically that leads to most likely a bear market. You can see this here in 2022 in 2018. You can see this here in 2020 in 2018. It did actually cross and we got that 19 point something percent drop, but we already got that in the S&P 500 when we reached that 2021 high. We dropped about 19%. However, due to that confusion with the tariffs and apparently them being back on. I don't think that this trade war is going to stop anytime soon. I think they're going to drag it out till at least the summer based on different things that the Trump administration has said 6 to 12 months. But you can see here that I shared this with you in the last video this right here. This April 9 2025 was tied for the 8th best day in the S&P 500 out of all of these best days in the S&P 500 only one of them marked the bottom and it was the year or the day that they printed 2 trillion dollars as covid stimulus every other time the market went lower. So watch out for this death cross here on the spy. But if I pull up the 300 day moving average, you could see that we are bouncing after that 19% drop towards those 2021 highs. We are now bouncing and are about to retest that moving average. Again. You could see that this pattern here. We had a small bounce to the hundred day. Then we dropped a small bounce of the 200 day. Then we dropped I would not be surprised if we fill this gap at the 300 day and unless we get any sort of reprieve on the terror front. I would not be surprised if that was the resistance for this cycle before moving back down. And if we take a look at the ES chart, the S&P 500 futures this trades 23 hours a day. So it is a little more comprehensive than spy, which doesn't trade 23 hours a day, but you can see here that we basically have these equal highs on the daily right there. This right here is Monday's high. This is Tuesday's high. And we broke above and are now retesting those highs as support. So I wouldn't I would not be surprised to see the S&P 500 at some point next week move up to take out these equal highs, which would put us somewhere here on the spy. Now, we've seen this before right where I initially thought that we'd get a little bit more retracement back up on the way down and we didn't really get any retracement until hitting that 300 day moving average. So if you know, the news is if the market digest the news that I just talked about terribly and we drop from here, obviously that is a possibility. I'm just saying this would be a very optimal area to short depending on what's going on the macro economics front. Like if price got to here because they said that they're going to do away with tariffs. Yeah, probably not a great short, but if everything is as is and price started creeping up and we got to this gap here at the 300 day moving average, that could be a likely place to take a short from now. I do think that the Fed is going to print money soon. Now. I think they're going to be printing money in the hopes of saving the bond market. It could have positive reverberations in the stock market, but for sure the liquidity in the bond market is of utmost concern to the government and to the Fed. So because of those rising yields that are going out of control. I do think that the Fed is likely going to be buying treasuries. Once again, they already slowed down the quantitative tightening something that I talked about in previous videos and I think they're now going to move to quantitative easing soon. You can see this new store here that says the top a top Fed official confirms that the Federal Reserve is ready to bail out Trump. It reads the Federal Reserve which stepped into calm the markets during the COVID panic is closely watching the 29 trillion dollar Treasury market for signs convulsions caused by Trump's tariffs could turn into a full-blown financial crisis. Now as Treasury Secretary Scott Besson issues a surprise prediction atop Federal Reserve official has said it would quote absolutely be prepared to step in to rescue the market. If US President Trump's trade war threatens the financial system. Remember I told you that the bond market is much bigger and more important than the stock market. If the liquidity in the bond market drives up, this is the safest asset in the entire world is a US Treasury. And if countries are dumping treasuries or not willing to buy treasuries, then that is a major sign that the world is losing confidence and bond investors are losing confidence in the United States ability to maintain stability as it relates to business and finances. So here's the Feds balance sheet and it's currently sitting at 6.7 trillion and they will likely step in and start buying assets in order to lower those yields that is going to be putting more assets on their balance sheet and will likely be closer to where we started before quantitative tightening. This is a very similar thing that happened when the Fed had 4 trillion dollars of assets on their balance sheet. And then in 2018 they started tapering and this was called the taper tantrum and right before the pandemic it wasn't because of the pandemic that they started buying assets. Once again, it was because of the taper tantrum and the fact that it caused a market shock and a near bear market as we saw in 2018. Then they stepped in and ironically that was the last time that we had a trade war. Then they stepped in and started buying assets and putting them on their balance sheet to improve the Treasury market liquidity. And then in 2020 is when they printed trillions of dollars 2 trillion initially and then another 3 trillion thereafter. So when we see this it is likely to me that Trump knows or has spoken to the Fed even in further detail than what is reported. He knows that he can continue the trade war because the Fed will be forced to step in. Like I said, he does not care about the stock market. He cares about the bond market and he knows now that the Fed has signaled that they are going to step in so he is no longer scared about taking this to the next level. Now, there's a 78% likelihood based on Fed rate futures traders that the Fed does not cut and I actually agree with this. I think that the data still is coming out strong. We even had some negative numbers in the last CPI inflation report and the Fed can easily start buying assets and putting it on its balance sheet without yet dropping yields. I don't think it's going to without yet dropping the rate. I don't think it's going to fire all the bullets that it has simultaneously. I think that they're going to start with quantitative easing and then will likely ease into cuts. Now, if the quantitative easing doesn't do much to quell the bond market, then we are on the cusp of a major financial event in my opinion, and I think then the Fed will cut when things are bad. This is why we always see those charts of oh, what happens when the Fed cuts when the Fed cuts the market tanks? Why? I thought cutting was good. Well, they only cut after the fact when the shit hits the fan. So what trades am I looking to make here? I'm going to be targeting this area for a potential short. So if we get to this level, there could be an optimal short. Now, don't take this as a stamp of approval as a perpetual stamp of approval. Obviously, as I said, it depends on what's going on at that time. If we get there, if you want the up-to-date alerts, then sign up below and come and join us and trade live with me every single day at Market Open. I day trade futures and I swing trade options. So if we get to this level, there is a potential short here at the $5.55 level on the SPY. And if we go to public, which is my options trading platform, you can see here that I collected $57 in trading rebates. Not only are options trades free, but they give you a part of the rebate for the trades that you take. So I made $57 from just opening up trades. Their bond account right now is also paying 8%, which is wild. So depending on if we get there or not, like I said, the news that just came out does not seem positive. So I don't think that we open positive on Monday, but if we eventually get to that level, then I'll be looking to buy the $5.50 puts, which would be at the money at that time right here, probably expiring 30 days out. I like to give myself enough time to be right. And also it is less subject to theta decay. If we get up here and you buy the $5.50 puts that are, you know, expiring in a day or two and you are wrong, those puts are going to lose 40, 50, 60% depending on how the market turns. Another thing, because I think that the Fed is going to likely step in here. You can see that TLT filled this gap here, which was the gap at the beginning of the year. This was actually the close to the inauguration right before the inauguration gap. Now, TLT is flat on the year while stocks are massively down. So bonds are still doing better than stocks year to date, but it definitely has lost its gains due to that parabolic move in yields. However, we are at a support level here and we filled this gap. I am potentially looking at bond longs here. I'm not talking about an investment here or a place to keep your cash. I'm talking about an actual trade such as trading TMF calls. You can see that TMF took out this liquidity level, filled that gap. TMF is just a leveraged version of TLT basically. But if I'm expecting that the Fed is going to step in here, I'm going to start buying up bonds because if those yields are, if the Fed starts buying up treasuries, those yields are going to drop like a rock. And later on, if they start cutting, those yields will drop even more. If we get a recession, those yields will drop even more. So I think from this point, as beat up as bond prices have been and as parabolic as bond yields have been, I think there is a potential asymmetric play here. Now, the problem with TMF is that the spreads are not great on all of the strikes. So you definitely want to pick a strike that has a good amount of open interest. And like I said, I like to give myself time. I might even go two months out on on TMF because I think that there are multiple events that might drop yields, even if we see an initial spike this week. But the point is, I might go two months out and pick a strike that has a good amount of open interest. So something close to the money that has a lot of open interest. If I was trading this expiration, it would be the 40 strike with 2100 at open interest. Now, in terms of stocks, there is also an asymmetrical play here based on the PE valuations. I think the S&P 500 can drop more, right? Unless, obviously, they do away with the tariff thing, then all this goes out the window. But I think that there is more to drop on the S&P 500 until the valuation gets back to that 75th to 25th percentile range, which is typically what we see when we hit bear markets, right? The valuations revert from being extremely expensive back to the median, basically. But the S&P mid-cap, this is what's interesting to me. I haven't seen a dislocation quite like this in a while besides the Russell 2000, which had something similar a while back. But the S&P mid-cap might be an index here, might be a sleeper index to pick up. As I said, you want to diversify your portfolio, not just invest in every tech company on the planet, consumer staples, healthcare, and you might add the S&P mid-cap 400 to that list. There is an ETF called IVOO or IVOO, which is basically like VOO, but instead of the S&P 500, it's the mid-cap S&P 400. This also pays a quarterly dividend of around 40 cents. I'm not going to start a position in it yet, but it's definitely something that I want to pick up based on the extreme drop in valuation trading, basically close to the 5th percentile. If you're wondering what's in that, you can go to IVOO Holdings and you can see exactly what is in that mid-cap 400 ETF. So there are quite a few companies, but it's companies like William Sonoma, Interactive Brokers, DocuSign, etc. I'm not looking to trade options on that. Just looking to diversify into that as a way to not put every single penny I have into tech. Now, if this trade fiasco still continues, here's where I'm looking at the S&P 500. I told you that that high from October 2021 would be my first target, and I did buy the S&P 500 there, but I'm eyeing around this $4.55-$4.60 area on the S&P 500. So not only do we have a fair value gap here, this is on the quarterly chart, the three-month chart. Not only do we have a fair value gap right here, but you can see on the quarterly chart that when we have these bear markets that we do tend to hit the 21 EMA of the quarterly chart. So I would not be surprised if we got a new low below $4.80 and got to around that $4.50-$4.60 level on the SPY. So there you have it, traders. That is my summary for the week. Hopefully you found some value in it. If you did, leave it a big fat thumbs up. Come and trade with us live every single day at Market Open. I trade futures. I day trade futures, and I also swing trade options. Obviously, we have long-term investments and stock analysis, etc. So come and join us live. Let me know your thoughts below. What do you think? Does this get much worse? Was that 9% pump something temporary? Do you think we'll make a new low or is this the bottom of the market? Obviously, everything is policy-dependent, but if they continue down this path relentlessly, I think the S&P 500 might see newer lows. And if bond liquidity continues to be an issue, I think that the Fed will step in. I don't know to what extent, but I do think that the Fed will step in and try and save the bond market. Anyway, traders, subscribe to the channel. Hit that notification bell. Stay safe out there. Peace. And I'm sure you guys may have noticed, but I switched over to using Public for my investing as well as my options swing trades and selling cash secure puts. It's a regulated broker based here in the US. Now, the reason that I like it over other trading and investing apps is because not only are the options trades commission-free, there are no commissions or no contract fees for options trades, but you also get a rebate for stock and ETF options trades. The rebate means that options trades are not only free, but you also earn money. They are less than zero. Now, the rebate is based on your monthly trading volume. So the more you trade, the higher your rebate is per trade. And for any cash that I'm not using, I could just throw it into a high-yield cash account that they have and earn 4.1% of my money.