With No Relief in Sight as Trump Refuses to Negotiate Tariffs, Here's My Game Plan
It looks like it will take weeks or months for serious deals to be made — and that will keep buyers on the sidelines.
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Markets worldwide continue to crumble as the Trump administration digs in and refuses to negotiate or cut tariff deals. The core problem is that the president has gone far beyond the anticipated reciprocal tariffs. At this point, even if a country cuts its tariffs to zero, that may not be enough for Trump. Trump is looking for compensation for decades of lopsided trade and doesn’t care about the market response.
The primary issue now is whether this hardline is just a negotiating tactic and, if it is, how long it will last. The market is panicking over the potential for slower growth and higher inflation. Not long ago, the market anticipated that there might be just one Fed rate cut in 2025. Now the market is seeeing a 40% chance of a 0.25% cut next week, followed by four more cuts later this year. Talk about stagflation has jumped sharply.
The aggressiveness of the tariff policies and the illogicality of the tariff rates surprised the market, creating a huge amount of uncertainty. The market has no idea how to fully discount the impact at this point, especially if these huge tariffs stay in place for months.
The drop in the market is great enough to create some capitulation, but the S&P 500 is not yet in bear market territory. Three hours prior to the open, the S&P 500 was down about 19.2% from the highs hit on February 19, which is just short of the 20% bear market threshold.
Technically, what is most significant about the market action is that it has been going straight down since the close on Wednesday, April 2. There have been no meaningful bounces or counter-trend moves. There are many stocks oversold and trading at prices that have nothing to do with their valuations. At some point, this is going to set up a huge snapback, but the timing is extremely difficult when there is so much uncertainty.
Keep in mind that the biggest bounces always occur in the worst markets. While it won’t take too much positive news to trigger a counter-trend move, it won’t last long if there is no greater tariff certainty. Right now, it looks like it will take weeks or months for serious deals to be made, and that will keep buyers on the sidelines.
My game plan is to watch for a tradable bounce and keep time frames very short. I want to build some longer-term positions in my favorite names, but I want to see some stabilization and better price action first.
At the time of publication, Rev Shark had no positions in any securities mentioned.
