To the Mooooooon! I think we just bottomed and we'll now see a retest of the highs.
I'm still net super bearish but I think a trap is possible.
I've taken profit and bought under 5200.
USSP500CFD trade ideas
S&P 500 Index vs PresidentIn this layout you can see how the S&P has been performed on each presidency.
Presidency terms,
Obama 1st term: after the financial recession, the index was trying to recover and we saw falls from 16 to 21%, market went up 83%.
Obama 2nd term: the index saw falls from 10 to 15%, Market went up 50%.
Trump 1st Term: the index saw falls 3 big times 11, 21 and 34% Market went up 68%.
Biden 1st Term: the index saw falls 27% and 10%, Market went up 55%.
Trump 2nd Term: we are in the 1st fall 21% not sure if it will continue going down.
The price wants to get closer to the 200MA every time
Fibonacci levels, we are on 0.5, we still have 2 more levels down so these 3 levels could be a good entry point 😊
The world is going crazy , who's to blame ?Unless you have been hiding in the rocks, most people would know what President Trump has done to the world at large. The social media is full of half truth, fake news and sensational news, to the advantage/motives of certain groups of people. That is why you always read it with a large dosage of salt, laugh it off and do your own critical thinking.
I know is hard, afterall, this has not happened before, at least not in the presidency of US government thus far. Most of us feel like stepping onto quick sand, a wrong move could land you much deeper than you were previously. Seeing your portfolio growing from nice chunks of profits to bloody red , oh my God ! Yes, on hindsight, we wish we could have listened to the wise guru, Warren Buffett.
Let's not get too far ahead and stay calm in this turmoil, volatile time. Deep breath........
And definitely do not lose sleep over money, health and family is more important !
Here, in the SPX 500 index, we are at a precarious position. After the 90 days pause, the market rally up but the fear remains and yesterday market proves itself. So, the first line of defence is the bullish trend line. If this breaks, then we are heading to the yellow support line. Now, this is no ordinary line, it is the weekly 200EMA indicator where in the past, each time it hits this level, the price action bounces up. Could President Trump knows TA, haha? Timing is near perfect !
Stay calm everyone ! Again, do not use margin to trade/invest no matter how attractive the market looks to you or you received a good tip from a friend. Stay with money you can afford to lose.
Update on my thoughts on long term fibs thesis I wanted to give an overview update for those who've followed my macro thesis over the years.
I've used various different things to support it but when it's come to my thoughts as to when the idea has failed I've always thought the only thing I really use for that is the big 4.23' of the 2008 crash.
Since 2019 I've used the thesis big fib levels will foretell big moves in SPX, and it's worked really well.
Inside the theory of trend formation through a fib swing I have been using, the 4.23 is the final boss. It's the biggest most important swing and at it everything is high stakes.
4.23 rejections can lead to 1.27 retracements. In the context of this chart, that would be a depression style move.
When this area was first hit in 2022 it made the high there. One of my known for 4.23's is they'll often bluff and then have some sort of spike out.
So if the 4.23 is actionable, we'd be in the end game now. Trying to work out exactly how much spike tolerance is very difficult but in the bear thesis this trading above the 4.23 should turn into a strong rejection. I'm talking conditions where weekly charts look like the 4 hour charts did in the original 10% break.
What would happen on a 4.23 reversal would be unspeakably bad with the size of these swings, and this 4.23 principle can be found time and time again marking the end of extreme moves (both up moves and crashes).
That's a concerning thing. If there's even a 5% chance of that happening I feel I have to think about it. Based on the odds of the fibs, the odds would be higher.
It'd be fair to say thinking a fib can affect such big things is irrational. But it would be honest to accept to ignore the fact they actually have right in front of us is all the more irrational.
But the 4.23 might break!
It's difficult for me to tell you the specific price at which I'd consider the 4.23 to have been broken but I can tell you the idea that it might break is something I deeply consider- because if that is going to happen, my bear thesis would never be correct inside a workable time/price move. This isn't a "Right eventually" sort of thing. The patterns have expectations.
If the 4.23 is not a top, then the plan totally changes. Because I know from my intraday / week trading that I really love to be fading 4.23s and 4.23 spikes regularly but if and when they fail the most exceptional of things happen. These are not all that notable intraday to anyone other than levels traders, but what if the same concept scaled up - I wondered.
I wondered this a while ago and noticed it was something I'd never really checked. As it happened, all the 4.23s I looked at in indices reversed.
Initially I found it tricky to find them but then I noticed the highest probability place to find them was heading into bubbles.
And this makes me super wary of the fact my bear thesis could be spectacularly wrong. Because around about this zone Nasdaq was getting into a 4.23 - and this looked quite bubble-like.
If I'd seen this in real time in the 4.23, I'd have thought that worth a fade.
1998. The Nasdaq did not make a high in 1998!
1998 was in fact a rather bad time to have a persistent bear thesis.
But you could have made money.
For a while there was a flux. During this you could have made some money. You'd just have to know when to stop doing that.
Inside a thesis such as this, when there is a drop you always have to consider we might be in a spot something like this.
From this move Nasdaq would go into a rally that literally changes the perspective of the chart. As you click through bar by bar the previous crash bars become hard to see.
Nothing but up.
Then sideways.
Nothing but up.
Then we're inside of the topping zone.
If you didn't decide before the fact, where do you drop the bear thesis there? It's tough. Because the rally section would seem like a blow off. Then we go sideways. Which feels like the steam has ran out. Then we go into the real blow off. Where to close your short would be handled for you if you didn't - but it's hard to know when you'd flip bull there.
For me, at least. Because I'd want to buy a crash move. And there really are not all that many of them. My style of trading is optimised for trading reversals (either of corrections or absolute) and steady and persistent pullback-less trends are trickier for me. I need to have a really good idea of where I'd want to switch to that style and my failure conditions (because all that momentum trading with no stops stuff isn't for me - I could not sleep at night - being someone who's benefited from so many major trend reversals and seeing how fast they happen).
Looking through different examples of 4.23 breaks (which really are mostly found before bubble like moves or crashes if inverted) I have come to conclusion that the best thing to have done would have probably been to buy the low of the last crash before the bubble.
Just buy the low before the bubble. That's it. Thanks for reading!
Of course, on a more practical level - we actually have to try to do that. Now...if the break was coming, we'd maybe actually be AT that spot.
I think to give the bearish 4.23 thesis its full fair chance we have to accept some sort of stop running above this recent high.
Stuff like that is totally fail game. Even something a bit more spikey would be fine if it rejected. But if we trend up here, break highs and then continue to trend up, I really do think that would be the conditions where I would stop generating bear short levels. I'd switch my methods to generating bear risk areas but main using these for bullish trail/breakout decisions.
I first came into indices in 2019 with my bear thesis on SPX. Which was spectacularly half right. But I'd forecast a two leg crash. Fortunately enough for me, when the high was broken I became disinterested in SPX and went back to Forex. Only setting an alert for the next big level, which triggered 2021. This is when I setup the "HoleyProfit" username.
This period of time has been the best time to be a bear inside of my trading lifetime. But I believe if we're not somewhere deep inside the end game for this bull market we could head into conditions where if you trade flawlessly as a bear you can perhaps scrape breakeven eventually. Which are not good times to be a bear. They'd be good times to be a bull.
If I don't think about this, we could have a move that looks like an obvious blow off in SPX to me.
And ends up looking like this.
Which I don't want to be short into. And realistically I'm not. I'd hit stops well before any of that madness affected me. But I don't want anyone who's followed my ideas and seen these having the big previous successes thinking it's a slam dunk sort of thing. I do believe if my bear thesis failed it would be spectacularly.
I believe we're in a bubble. Whether we're late or mid bubble I am open minded to.
Being mid bubble and being aware of it would be INCREDIBLE. Some people think I am determined to be a bear just because I want to be. I'd be happy with massively awesome markets. A trend one way or the other pay just as much to me. It's better to make money in conditions your broker and bank are not going out of business.
I really don't mind being bullish. It's just sketchy doing it at major resistance levels with all the other weird confluences (like interest rate patterns etc).
We are somewhat close to crux in this thesis. Hopefully you can easily understand how it's not practical to put a price on specifically but I do want to note that while I have plans to short different bull trap levels / spike outs on this rally - we are getting the point where my net thesis may be proven wrong on the large reversal.
If that happens, my option and style will be become polar opposite. For me to continue to be bearish above the 4.23 would be me just wandering off into a jungle of random for trying to have an overall plan. And in fact, for me to not switch my bias from bear to hyper bullish on a 4.23 would be intellectually dishonest and directly fading the edges that the original idea bet on.
Markets may make big reversals at major resistances, but if they break- can be much different.
I wanted to be clear and thorough on this while while are still generally low. While I've discussed some different bear plans into a rally, it is also one of my considerations that this rally could end up spelling out the end of my bear thesis if we made new highs and were persistent.
The net bear thesis will be right or wrong inside a specific zone. That zone is big and tricky to define, but it's specific. Specific in the fact that I'm saying we're specifically in that zone.
There's potentially for setups that could take a lot of time to complete, but in terms of the zone and conditions what's accepted is getting narrower and narrower.
It is entirely placeable within the next 6 months my entire macro swing bias will have changed.
Or this might all just be the bull trap taking. We'll see how it goes.
If SPX Was to Make a Slow Topping PatternI've been super bearish indices for a while but heading into the 5000 area in SPX I am becoming increasingly bullish.
I think in the extremely bearish setup we bounce to 5500 and if we are actually making a big major top, then it's viable we swipe at the highs a few times.
Liquidity ... and all that.
This could potentially be a long time of choppy action around the topping zone.
If that's going to happen there's epic bear trades coming in the future but to prevent from becoming exhausted as a bear before they happened - you'd be wanting to bank in the rally.
Have plans to pick up an assortment of bets on a new high being made within 3 months somewhere a little under 5100. And picking p spot longs at some point which I can trail stops on and wait to see if the bull trap levels fail.
I do think at the very least the min risk bears have into 5000 is a 10% bull trap. I'd be very careful as a bear now.
Could the US500 be setting up for a bounce?Hello,
The US500 is trading near the trend line, a key area where technical investors will be looking for a bounce back. While the current market remains choppy due to tariffs from the US president, technical analysis does offer us key areas where we can look for entries going forward.
What is certain is that this is not the time to panic and sell all your held positions. As always, during moments like these composure + a clear plan are your best line of defence. Probabilistic thinking as well can go a long way in identifying great opportunities. We’re all dealing with known and unknown variables now, and there’s no shame in saying, "I don’t know."
For me I see opportunities in the S&P especially because the news is already out. Additionally, we are coming into earnings season when the market is at the bottom. Companies that show resilience will attract early investors and the index will bounce back. So please keep your long-term view.
Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
US500 Historical Rallies & Pullbacks with a Potential ProjectionI’ve observed the US500’s performance over the years, marking rallies with a blue line and pullbacks with a yellow line. Looking at the chart, a systematic repetition of these movements emerges, which, at first glance, seems to follow a recognizable pattern.
Specifically, I’ve cloned the blue line from the rally that started on 03/23/2020 and ended on 12/20/2021, now represented by a green line, to hypothesize a potential future rally. This clone is based on the duration of previous pullbacks:
The first pullback, before the 2020 rally, began on 02/20/2020 and ended on 03/23/2020.
The second pullback, the current one, started on 02/17/2025 and might conclude around 04/07/2025, potentially paving the way for a new rally.
the angle of those pullbacks is almost identic
This "snapshot" observation suggests we could be nearing a turning point. Of course, this is just a hypothesis based on historical patterns, and I encourage cross-referencing it with other indicators or analyses. What are your thoughts?
S&P500 vs Unemployment vs Yield CurveI'd be surprised if that was the bottom in equities. 10yr/2yr is still coming out of inversion which historically is followed by a recession and a decline in equities, and we have unemployment remaining stubbornly low with only one direction to go from current levels. Market selloffs usually mean investors lose money while main street loses jobs so we should start to see the unemployment rate begin to rise from here assuming that the tariff war isn't over.
Trump proved today that he has no intention of relenting on the new tariffs; when China retaliated with 34% tariffs on US goods, he immediately hit them with 50% tariffs. Not sure which side will cave first, but as long as there is uncertainty around US/China trade the risk for further declines in equities remains.
The previous two times the yield curve inverted, we saw 50%+ declines in equities and rising unemployment when the curve came out of inversion. There was also a short-lived inversion in 2019 with a spike in unemployment and falling equity prices due to Covid, but the Federal Reserve lowering interest rates to 0% and printing trillions of dollars kept that bear market short and sweet.
We currently have a Federal Reserve that needs higher rates to fight inflation while at the same time we have a president who wants lower rates to stimulate growth. Catch-22 for the Fed: if they lower rates, they risk reigniting inflation. If they raise rates or keep them flat during a market decline it will speed up the decline in equities. Trump knows this which is why I don't think that the tariff war and market decline are over.
US 500 Index – Retracement Holds DeclineAfter one of the most extreme trading days for the US 500 index that we have seen since the pandemic of March 2020, a slightly uneasy calm has descended across markets this morning as traders await the next tariff updates from President Trump and his team of advisors.
Right now it is still unclear whether President Trump would provide an opportunity for individual trading partners to reduce the penalty level or gain exemptions from the reciprocal tariffs that are due to go into force tomorrow.
Traders are also on the lookout for any news from China regarding tariffs or fresh stimulus measures to support the economy, and the announcement of retaliatory actions from the EU are still on the horizon.
What is clear, is that as this unfolds across the rest of today and tomorrow, being prepared for any volatility in the US 500 index that may appear again, with a trading plan, clear assessment of technical levels to deploy any potential stop loss and take profit orders, may well be a solid approach to consider.
Technical Update: US 500 Index - Retracement Holds Decline
During times of market turmoil, where sharp declines in the price of an asset are seen to reverse what was previously a strong phase of strength, traders will often focus on using Fibonacci retracement levels to identify potential support levels.
Clearly, global equities have recently entered a period of uncertainty and aggressive price declines. However interestingly, the US 500 index has found support this week at a Fibonacci retracement level, which at least for now, has succeeded in holding declines, and is even starting to see attempts at an upside recovery materialise.
Looking at the weekly chart of the US 500 index above, we can see the latest price capitulation tested 4791, which is equal to the 50% Fibonacci retracement of the October 2022 to February 2025 advance.
Traders may now be asking ‘Do the latest price declines to 4791, represent the extent of the current liquidation in assets, and can upside now emerge again?’
It is currently impossible to answer this question with any true conviction as there is still much to be heard from President Trump regarding tariffs, which will likely dictate future market sentiment and price trends.
However, monitoring important support and resistance levels over the upcoming trading sessions may help us gauge where the next potential directional moves may be seen in the US 500 index.
Possible Support Levels to Monitor:
Having tested the 4791 Fibonacci retracement level and seen a recovery develop from it this week, it may be suggested this remains an on-going downside support focus in price. As such, it may well be closing breaks of this level if seen, that could skew directional risks towards the potential of further declines.
Therefore, closes below 4791 might be an indication that the recent weakness may carry further to the downside, prompting traders to look for possibilities of a more extended decline in price. This may in turn lead to tests of 4474, which is the deeper 62% retracement, maybe even further if this gives way.
Possible Resistance Levels to Monitor:
Having seen the 4791 support hold and prompt the latest recovery moves, some traders may well be looking for the potential of a more sustained recovery in price, even though much will depend on the reaction to any future trade war escalation or easing of tariff concerns.
By calculating Fibonacci retracements on the latest US 500 index decline, we may be able to gauge possible target resistance levels if a recovery in price is to emerge.
The 38.2% Fibonacci retracement of the February 2025/April 2025 sharp sell-off stands at 5313. This may be an interesting level to watch, as if it were broken on a closing basis traders may start to look for fresh attempts to push towards higher levels once more. In this case, the 50% retracement resistance level which stands at 5474, and the 61.8% level at 5635, could be relevant.
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Is Trump Intentionally Crashing the Econ?I want to preface this by saying I'm a TA and this is just dinner table chat as far as I am concerned.
I've no interest what-so-ever in why a market moves. All the money is made based on how it moves- and the TA is working great for that.
Just sharing a theory that is floating about (It's not mine).
The idea is Trump is intentionally crashing the markets in an attempt to reduce the debt burden on the US.
This would work by this sequence of events;
1 - Markets crash. Making people who care about their money anxious and less eager to take risk in the stocks (etc) markets.
2 - This money moves to bonds. Pushing bond prices up. Rising bond prices push interest rates down. So crashing the econ can lead to lower interest rates.
3 - At a lower interest rate (say 2%) the US can refi its debt.
Inside of this theory, everything we're seeing is part of a calculated plan to, literally, force stocks lower.
Modified Count to Reflect Recent DeclineIn truth, the levels we're seeing this morning when the SPX cash market opens, I was not anticipating seeing till the 3rd quarter of this year. Mid last week, we had positive MACD divergences on the intraday charts and was setting up to be almost a textbook bottom.
Nonetheless, the SPX cash market will not hold the must hold zone when it opens this morning. This means we will get a retracement higher in a minor wave B that should last some time. This will represent one the final opportunities traders will have to relieve themselves of excess portfolio leverage and risk.
We very well may spend the summer months retracing higher...but there is no doubt some of you reading this will assume this will result in the resumption of the previous bull market.
It will not be.
S&P INTRADAY oversold bounce backTrump threatened a 50% import tax on China, adding confusion over his global tariffs. China promised to hit back and moved to support its markets.
Stocks bounced slightly as investors looked for bargains, but uncertainty around U.S. trade policy remains. U.S. Treasuries rose after falling on Monday.
Wall Street is getting more cautious. BlackRock downgraded U.S. stocks, and Goldman Sachs warned the selloff could turn into a longer bear market.
Key Support and Resistance Levels
Resistance Level 1: 5273
Resistance Level 2: 5379
Resistance Level 3: 5510
Support Level 1: 4815
Support Level 2: 4700
Support Level 3: 4585
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Buckle Up for the Next Part of the Huffy CycleAs everyone knows, indices move on a predictable 4 month cycle - known as the "Huffy cycle", and this is programmatically built into markets are Donald Trump switches from being "Huffy" (Down moves) to "Less Huffy" (Parabolic organic growth moves). Donald has been huffy lately ... so we ALL KNOW what comes next ...!
Are you mentally prepared for the next glorious breakout of the Huffy cycle?
I'm sure everyone has noticed the 4 month huffy cycle which can be extensively studied, understood and used to forecast the future flawlessly because if we look at markets over 12 months we can see it looks a little bit kinda like a pattern - so long as you just ignore or remove the parts that are not a pattern. Which is how market cycles work.
If you see something a few times, you can be sure it will happen again forever. And if it doesn't you can be sure at worst it can only go down 70% and then it's probably a buy from there.
So the huffy cycle is basically risk free, if you look at it in the right way.
"But what about all the the things happening" I hear you ask.
Lol.
NGMI!
If you're too stupid to understand the huffy cycle, that's your problem. Not mine! HFSP.
Now, of course we all know SPX is not where near gambley for us to generate our birth right generational wealth from the markets. It could take literally YEARS to make money in SPX. Who has time for that? Of course, we want to be looking at the most stupid and speculative things we can - because those are the ones the savvy investors are buying.
That's right folks .... "Squeeze season" is upon us.
It's been 4 years since we seen anything make any truly irrational hyper parabolic moves in stocks. As we all know, this is too long. Stonks are not allowed to go this long without there being a squeeze cycle. Some doomers out there are even saying squeeze season has been cancelled (lmao ok boomer) - but we know the truth.
Squeeze season has just BEEN DELAYED and it being delayed actually means it will just be BIGGER THAN EVER!
I don't really have any logic or ideas to back up why it was delayed and why this means it will be an even bigger move, but if I say the word "Whales" I think that covers everything.
There are some idiots who are sceptical of the huffy cycle, but I am only writing my post for the future billionaires who are not too bothered about checking the details.
And we all know what comes next!!!
WGMI, fam.
Maybe This is all a Big Head and Shoulders.This is feeling suspiciously like honey trapping of the bears and I think there's fair odds we're going to see a strong squeeze starting now and lasting over at least the next couple weeks.
This could easily take us to 5800 or so inside of the head and shoulders setup
So here’s what I’m doing: Not Panicking.This analysis is provided by Eden Bradfeld at BlackBull Research.
Listen, the US has survived the depression of WWI, the Great Depression, the depression of WWII, oil shocks, the dot com bubble, the GFC, the COVID-sell off. It’ll likely survive this.
In the scope of history, that $1 survived very well indeed. Panicking and running for the hills does not do so well. Winston Churchill was a great and flawed man but a terrible investor; he bought and sold shares prior to the 1929 crash in such speculative investments as mining companies, railways, and so on — most of them lost money (hence why Churchill continued to write at such a pace — to fund his Champagne-and-spec stock lifestyle). Hetty Green, on the other hand, (known as the “Queen of Wall Street”, managed to do very well her time — her quote?
I buy when things are low and no one wants them. I keep them until they go up, and people are crazy to get them.
Now, that’s something I can get behind.
Nobody wanted Meta a few years ago. I wrote an internal memo, close to its plummet in ‘22 (it got to $99 or so a share!). I wrote this:
ii) Yet what if we were to tell about about a company with this set of heuristics? Let’s call it “Company A”
Company A has a 31% return on equity and a 20% return on capital.
It has a net income margin of 37% and a FCF margin of 21%
Its income has a compounded annual growth rate over the last 5 years of 41%
If we add in numbers, now, let’s say the net income for 2020 was $29 billion, and $10 billion of that was used to repurchase stock from shareholders?
Let’s say the unlevered FCF is around $6 billion per quarter, and let’s say the debt to equity ratio is about 9x.
In other words, Company A is grows at a quick clip, and has done sustainably for the majority of its life. Its return on capital and return on equity would make any investor happy. Its FCF is an absolute machine.
Would you buy Company A?
Company A was Meta . You would’ve roughly made 4x or 5x’d your money if you’d bought around then. The point is, the fundamentals of a business matter, and right now there a quite a few exceptional businesses with good fundamentals trading at a good price. Alphabet (Google) trades at ~16x earnings. LVMH trades at ~18x earnings. And so on. Brown-Forman trades at ~15x earnings. These are all “inevitables” — Google will continue to be a dominant advertising platform, LVMH will continue to sell luxury, and Brown-Forman will continue to sell Jack Daniel’s and so on.
I talked to my ma in the weekend. She is not really a share person. Her portfolio is a bunch of “inevitables”. It’s done very well. She said “aren’t you worried about this stock market?”, and I said “You love supermarket shopping, Mum. If you see something at a 25% discount you buy it. You come home, and you’re delighted that you found some mince on special²”
She was like, “oh, that makes sense”.
The problem is you have a lot of people looking at charts and catching worry that the world will end. The world, I am delighted to say, has a magnificent disposition to carry on.
S&P 500 ,,, Update
The chart has reached a major support area, despite the presence of large emotional bearish candles. While taking a position at the V-shaped pivot point carries some risk, the market may react emotionally given its previous decline like the 2020 correction.
This support area is comprised of:
- A significant pivot point from January 2022
- A PRZ (Potential Reversal Zone) between the 50-61.8 Fibonacci retracement levels
- The 100 Fibonacci extension level
- Support from a valid trend line
Trend changes can be unpredictable, and opinions may vary among traders and analysts. However, this presents a low-risk opportunity to consider new buying positions once clear signs of a trend reversal emerge.
It's essential to be patient and wait for the right moment to act.
Is the U.S. Stock Market Forming a Bottom? (April 7th 2025, YES)Is the U.S. Stock Market Forming a Bottom? (April 7th 2025 Analysis) - by Yuri Duursma
Market Overview: Indices in Bear Market Territory
After a strong start to the year, U.S. equities have stumbled extremely badly in recent weeks. The S&P 500 is currently down about 22% below its February 2025 all-time high (as the time of writing this, Monday 7 april 3AM EST time), the index is trading slightly above $4,800) , while the Nasdaq Composite has fallen roughly 26.5% from its peak – putting it deep into a bear market at $16,325 points. Even the blue-chip Dow Jones Industrial Average is in a correction, having slid around 19%+ from its ATH. This broad decline has been accelerated by escalating trade tensions – notably sweeping tariffs announced in early April – which sparked a vicious selloff and the worst week for stocks since 2020 In just the two days following the tariff news, the S&P 500 plunged over 10%, wiping out trillions in market value (Hedge funds capitulate, investors brace for margin calls in market rout | Reuters). Such rapid, across-the-board declines have investors asking: Is the market finally near a bottom, or is there further pain ahead? This analysis will go over key technical indicators and sentiment gauges as of April 7, 2025 to assess whether a market bottom may be forming.
Volatility and Options Sentiment (VIX, Put/Call Ratio & Implied Volatility)
One classic hallmark of a market bottom is extreme volatility as investors capitulate. The Cboe VIX, Wall Street’s “fear gauge,” recently spiked to 60 on April 7, a level not seen since the early stages of the COVID crash in 2020 and the peak of the Global Financial Crisis in 2008. This move marks a significant shift in sentiment: while in the beginning of last week the VIX was in the low 20s, this surge indicates a full-blown volatility shock, consistent with historical capitulation events. Such a sharp spike strongly suggests the market is experiencing a climax in fear and forced liquidation. Over the past three decades, VIX readings above 50 have typically occurred only at major market bottoms.
This extreme VIX level adds to the growing body of evidence that fear has reached saturation, and we are potentially witnessing the formation of a durable bottom.
Another critical indicator is the put/call ratio, which reflects how aggressively traders are buying put options versus call options. Initially, the ratio hovered around 0.85, indicating moderate bearishness. However, as of April 6, 2025, the put/call volume ratio surged to 2.06 on SPY options specifically, based on live Barchart data. That means traders are buying more than twice as many puts as calls, a level not seen since the COVID crash.
Further reinforcing the signal, SPY’s open interest put/call ratio stands at 1.68 or 1.64 depending on the scource, with put open interest at 10.99 million contracts compared to 6.72 million calls, according to OptionCharts.io. This skew indicates extreme hedging behavior, consistent with historical panic conditions.
Even more striking is the implied volatility (IV) for SPY options:
• IV (30d): 38.52%
• IV Rank: 101.48%
• IV Percentile: 100%
• Historical Volatility: 27.98%
This means the current implied volatility is higher than 100% of the past year’s readings, signaling maximum premium demand for protection. When IV reaches such extremes, it generally implies that traders are paying record-high prices to hedge downside risk—a common occurrence at or just before market bottoms.
In summary, options sentiment now reflects not just fear, but full-blown capitulation:
• VIX at 60 (multi-year high, extremely rare event)
• Put/Call Volume Ratio at 1.68
• SPY IV at 38.52% with 101.5% IV rank
• Put open interest heavily outweighs calls
Taken together, these suggest an intense bearish consensus that, historically, often occurs just before a reversal. While no single metric predicts a bottom, the convergence of these extreme levels across volatility, positioning, and premium costs dramatically increases the probability that a capitulation low is forming or has just formed.
Market Breadth and Technical Trends
Broad market internals provide further clues about the selloff’s severity. Market breadth – the ratio of advancing to declining stocks – has deteriorated dramatically, reflecting how widespread the downturn is. In late March and early April, down-days were strikingly one-sided. For example, during the week of March 31 which, only 188 stocks on the NYSE rose while 2,662 fell, with a staggering 1,073 stocks hitting new 52-week lows (Markets Diary - WSJ). That means roughly 93% of all NYSE-listed issues declined over that period – an extremely weak breadth reading. Such lopsided selling (where virtually everything is “thrown out”) is often seen in the late stages of a bear move, as even high-quality names get caught in the capitulation. That said, some technicians look for 90% down days (when 90%+ of volume and issues are to the downside) as a classic bottom signal. So far we’ve seen readings in the 80-90% range (e.g. about 81% of S&P 500 stocks fell on March 31) (Wall Street searches for elusive signs that market bottom reached | Reuters), but not quite a definitive 90% washout on a single day. The breadth data thus indicates heavy selling pressure, if not a textbook capitulatory flush just yet. But keep in mind this was on march 31st. The real pain came the week after that, with the s&p500 falling 10% in 2 days, a decline I have rarely seen in my 7 year trading career.
Death Cross, might actually signal a bottom instead of a further decline
In terms of trend indicators, the major indices have decisively broken below key moving averages. The S&P 500, Nasdaq, and Dow are all trading well under their 50-day and 200-day moving averages, which confirms the intermediate-term downtrend. In fact, the decline has been steep enough that the market turned into a so-called “death cross” pattern – where the 50-day average crosses below the 200-day average. This crossover is a lagging technical signal, but it underscores that momentum has flipped negative. (Notably, many high-flying stocks from last year have already seen “death crosses” of their own.) While ominous, it’s worth remembering that such signals often follow the bulk of a decline – i.e. by the time a death cross occurs, a significant amount of downside has typically already happened. Often, a death cross appears right when stocks are about to bottom. From a contrarian perspective, technical weakness itself can set the stage for a bottom, as oversold conditions and deeply negative momentum sometimes precede eventual stabilization. Still, at this juncture the price trend remains firmly downward, and bulls would want to see indices regain their moving averages or at least flatten out before declaring a true bottom.
Fear & Greed Index: Sentiment at Extreme Fear. REDICULOUS levels (4/100)
Perhaps the clearest evidence of the market’s psychological state comes from CNN’s Fear & Greed Index, a composite of seven market indicators (market momentum, stock strength, breadth, options activity, junk bond demand, volatility, and safe-haven demand). As of early April 2025, this index is deep in the “Extreme Fear” zone (Best Buys April 2025 - Compounding Quality ). In fact, the Fear & Greed reading has collapsed to levels last seen only during major crises – comparable to September 2008 (the Lehman collapse) and March 2020 (the COVID crash) (Best Buys April 2025 - Compounding Quality ). Such an abysmal sentiment reading of 4/100 indicates that investor psychology is extraordinarily bearish right now. Anecdotally, panicked retail investors and cautious institutions alike are exceedingly risk-averse – selling stocks, hoarding cash or Treasury bonds, and otherwise assuming the worst. Also, gold hit a new all time high on April 3rd, completely shattering the $3000 mark. Another sign of extreme fear in the markets.
From a contrarian standpoint, extreme fear is usually a super bullish signal. The famous adage by Warren Buffett, “Be fearful when others are greedy, and greedy when others are fearful,” resonates strongly at moments like this (Market and Investor Sentiment for April 2025 | Certuity). An Extreme Fear reading implies that a lot of bad news and pessimism is already “priced in” to the market. Historically, when the Fear & Greed Index is this low, stocks have often been near a bottom or at least poised for a relief rally (because most investors who were inclined to sell have already done so). It suggests the market may be approaching maximum pessimism, a precondition for a durable bottom. However, sentiment alone doesn’t call the bottom – it’s necessary but not sufficient.
We need to also see actual buying interest returning (or catalysts improving) to confirm a turning point. As one market technician noted, “First you get the fear (capitulation), then you need the positive reaction to confirm a low has been made” (Wall Street searches for elusive signs that market bottom reached | Reuters). Right now we clearly have the fear, but we’re waiting to see if buyers step back in to establish a floor. Looking at the volume of the SPDR S&P500 retail ETF trust, we can see that the volume hit 217.97M. This is the highest volume we have seen since January 2022, which was the low before the index at least saw a significant bounce up.
Macroeconomic Backdrop and Market Psychology
Beyond technicals, the broader macroeconomic narrative and investor psychology cycle provide context for whether a bottom is forming. The current selloff has been catalyzed by a specific shock – a global trade war scenario – which raises uncertainty about economic growth and possibly higher inflation leading to raised interest rates. Newly announced U.S. tariffs and swift retaliation from China have led investors to price in a higher risk of recession (which J. Powell confirmed), shattering the complacency that prevailed in late 2024 (Stock Market on April 4, 2025: Dow plunges 2,231 points into correction territory while Nasdaq enters bear market; S&P 500 books biggest weekly drop since 2020 as China retaliates on tariffs. - MarketWatch) (Hedge funds capitulate, investors brace for margin calls in market rout | Reuters). Just a few months ago, many market participants were optimistic (perhaps overly so) about U.S. economic “exceptionalism” and continued earnings growth. Now, that optimism has flipped to extreme fear and disbelief. We see signs of capitulation on the institutional side: some hedge funds have reportedly liquidated their stock portfolios entirely to cut risk, citing a “chaotic” outlook and unclear future (Hedge funds capitulate, investors brace for margin calls in market rout | Reuters). Margin calls are forcing leveraged investors to sell into the falling market, adding to the sense of forced liquidation. This kind of “get me out at any price” trading behavior is typical of late-stage bear market panic. However, a chain reaction of margin calls could lead to even bigger losses. (this might also be the reason traders both institutional and retail are panicking)
On the psychological curve, markets appear to be transitioning from the “fear” to “capitulation” phase. Complacency (seen when investors kept buying dips earlier despite warning signs) has definitively evaporated. In its place, despair and panic are increasingly evident – but these are ironically the emotions that precede a market bottom in the classic Wall Street psychology cycle. The saying “darkest before dawn” applies: just when sellers are most exhausted and pessimistic, the groundwork for a bottom is laid. I think the article about margin calls for hedgefunds is a good indication of that. There are also early hints of a possible turn in narrative. For instance, the bond market was rallying tonight (this wasn’t the case onas money seeks safety, and traders are starting to anticipate Federal Reserve rate cuts to cushion the economy (Hedge funds capitulate, investors brace for margin calls in market rout | Reuters). Easier monetary policy or a breakthrough in trade negotiations could serve as a catalyst to stabilize stocks. Always keep the possibility of trade negotiations in mind with trump. You never know what he is up to. He could flip 180 degrees in a second, as we have seen his unpredictability in the first quarter of his presidency term.
It’s also worth considering what the next phase after a bottom might look like: often, markets experience a “disbelief rally” – an initial rebound that many mistrust, thinking it’s just a short-lived bounce. If a bottom is indeed forming around now, any rebound in coming weeks might be met with skepticism (investors calling it a “dead cat bounce” or expecting another drop). Such skepticism is normal in early recovery stages; only after the market consistently stops making new lows do investors shift from disbelief to cautious optimism. For now, though, the predominant macro mood is still one of shell-shock. Economic indicators (e.g. manufacturing data and consumer confidence) have weakened, and corporate earnings outlooks are guarded, all of which justify a cautious stance. The collective psyche has moved toward “prepare for the worst”, which, paradoxically, is what creates the conditions for things to start getting better.
Major indices have undergone a sharp correction, valuations have pulled back, and sentiment is extremely bearish – Fear & Greed is at extreme fear (Best Buys April 2025 - Compounding Quality ), put/call ratios are elevated (Wall Street searches for elusive signs that market bottom reached | Reuters), and market breadth shows widespread capitulation-like selling (Markets Diary - WSJ). Importantly, these are the kinds of conditions that historically precede market bottoms, as selling pressure eventually exhausts itself and opportunistic buyers step in. There are early anecdotes of capitulation (e.g. hedge funds giving up on stocks) and volatility has surged, indicating peak fear may be near.
However, it is equally important to note what’s absent or uncertain: No obvious positive catalyst has emerged yet to definitively turn the tide. The risk factors (e.g. trade war, recession odds) are still in play, meaning investors could remain skittish. In essence, the market might be forming a bottom, but it has not conclusively confirmed one. Bottoms are only ever obvious in hindsight. In real time, one can merely weigh the evidence. As of April 7, 2025, the evidence leans toward an aging selloff with growing contrarian appeal – the crowd is very fearful, and value is returning – but patience and caution are warranted. Traders will be watching for telltale confirmation signals of a bottom: stabilization of prices above recent lows, a drop in volatility, improvement in breadth (more stocks advancing), and the market’s ability to rally on bad news (indicating selling has dried up).
For investors, the current environment calls for a balanced, objective approach. The conditions are certainly closer to a bottom than they were a few months ago during the greed/complacency phase, but that doesn’t guarantee the exact bottom is in. It helps to remember that “being early” to a bottom is far better than being late to a panic. I think it is time to DCA aggressively into the markets as of 7 april 2025. With fear running high, long-term investors may find opportunities to start nibbling selectively at high-quality stocks trading at a discount, while keeping some powder dry in case of further downside (Wall Street searches for elusive signs that market bottom reached | Reuters). In summary, the U.S. stock market is showing classic signs of bottoming – extreme fear, heavy hedging, and broad weakness – yet until we see the market’s reaction stabilize (and some resolution to macro risks), it’s prudent to remain vigilant. A bottom could be forming, but confirmation will come only with time and subsequent market action, not simply the calendar. Investors should stay disciplined, focus on quality, and be ready for continued volatility as the market seeks out its true bottom.
Sources: Key market statistics and sentiment indicators were referenced from recent analyses and reports, including Reuters, MarketWatch, and investor sentiment surveys (e.g. CNN Fear & Greed Index) (Wall Street searches for elusive signs that market bottom reached | Reuters) (Stock Market on April 4, 2025: Dow plunges 2,231 points into correction territory while Nasdaq enters bear market; S&P 500 books biggest weekly drop since 2020 as China retaliates on tariffs. - MarketWatch) (Best Buys April 2025 - Compounding Quality ) (Wall Street searches for elusive signs that market bottom reached | Reuters) (Markets Diary - WSJ). These sources provide context on the April 2025 market conditions, highlighting the elevated volatility (Wall Street searches for elusive signs that market bottom reached | Reuters), bearish options positioning (Wall Street searches for elusive signs that market bottom reached | Reuters), weak market breadth (Markets Diary - WSJ), and extreme fear sentiment (Best Buys April 2025 - Compounding Quality ) that characterize the potential bottoming process.
Technical analysis TA:
As for the technical analysis, my self written indicator (which is also based on various community open scource trading view scripts) Shows that we are back in the equilibrium zone. Furthermore, the stochastic RSI has hit 0 on the weekly, and the regular RSI is sitting at 26.6, the lowest level since the 2020 covid crash. Furthermore the indicator printed an 8/9 on the weeikly chart, with 9 giving a checkmark. Usually an 8 or a 9 signals a bottom. The daily chart is sitting at a 7/9, which makes me think that we are at a bottom, if not EXTREMELY close to one. Right now, we have also hit a key support area, the 2022 all time high before the markets crashed like i predicted (see previous articles)
So TLDR: What is the plan?
Of course, timing the market is risky, however I think this is a good time to Dollar Cost Average very aggressively into the markets. Personally I did my first buy ins on Friday April 4th, and will continue to do so this week. EVEN if we end up crashing further, we will always experience a dead cat bounce. Stocks don’t go down in a straight line. As my stocks are in the profit, i will put my stop losses into the profit as well.
If the stop losses get hit into the profit, we wait what the market does. Maybe we buy again, a few weeks later maybe we will stay out and hold cash. Only time will tell what the best plan is when that happens. There is no point in deciding that right now. TDLR: Bottom is most likely in or VERY, Very close. BUY, but keep some cash at hand for if the market declines even further (or to keep healthy margin requirements if we end up buying with leverage, which is a bit riskier. Don’t time the market, but act appropriately. Opportunities like this create wealth for the brave in extreme fear situations. TIME TO BUY, DCA HARD INTO THE MARKETS, but keep a little bit of cash for if we do end up going lower!!!!!!!!!!!! Personally, I think blue chip stocks are a steal right now. And the buying doesn't stop there as mid caps also provide amazing opportunities right now.
SPX500 Long - Bounce of 5200 key psychological level
Tariffs are paused. CPI data was good, coming in at 2.4 instead of 2.5, indicating room for Fed to lower interest rates if economy gets worse. I expect prices to climb back up instead of getting pulled down by just China trade war.
Entry: 5200
SL: 5160
TP: 5500
Results of ideas thus far:
Number of trades: 4
WR: 25%
Profit: 0.9R
Notes: This is currently for personal practice to write out trade ideas. Feedback is welcome, and please don't mind if none of this makes sense.
