Until There Are Signs of Tariff Negotiation the Market Is in Freefall

The market was slammed at the open Thursday on the tariff news. The S&P 500 has dropped 3.7%, and the Magnificent Seven MAGS names are down 5.6%. Breadth is running close to five to one negative, and there are close to 1,000 stocks at new 12-month highs.

The Russell 2000 small-cap index IWM is now officially in a bear market, as it has dropped 20% from the high it hit on November 25, 2024. Other indexes are still well above that level, but over 70% of all stocks are now trading under their 200-day simple moving average.

Market players are trying to sort out the impact of these tariffs, which are much higher than anticipated. The biggest problem is that no one seems to think that they will work, and there is no indication yet of any negotiations. Once there are headlines about modifications that should help produce some support levels. Dip buyers are too scared to do anything right now.

There are a few pockets of safety in stocks with little tariff exposure, such as Verizon VZ, Kraft Heinz KHC, Philip Morris PM, and Kroger KR, but technology is brutal, and there is too much ugliness for major rotation to take place.

Two names I’m watching as safe harbors from tariffs are Uber UBER and AST SpaceMobile ASTS. Overall, market conditions may prevent big bounces, but they should have some fairly good support.

My game plan is to not try to bottom fish until there is news about tariff negotiations and modifications. Too many economists and pundits are predicting that these tariffs are set in stone and are extrapolating an economic disaster. I don’t believe that is likely, but we need the Trump administration to show some willingness to modify these tariffs that are effectively the highest in history.

Just because a stock is down substantially doesn’t mean it is a good buy. The S&P 500 is hitting new intraday lows an hour into trading, which is not a good sign.

At the time of publication, Rev Shark was long UBER, ASTS, VZ and PM.