Home › Market News › Stocks, Commodities, and A Few Nuggets of Trading Wisdom
The Economic Calendar:
MONDAY: Used Car Prices (8:00a CT), Fed Kugler Speech (9:30a CT), Consumer Credit Change (2:00p CT)
TUESDAY: NFIB Business Optimism Index (5:00a CT), Redbook (7:55a CT), 3-Year Note Auction (12:00p CT), Fed Daly Speech (1:00p CT)
WEDNESDAY: MBA Mortgage Applications (6:00a CT), Wholesale Inventories (9:00a CT), EIA Petroleum Status Report (9:30a CT), Fed Barkin Speech (11:30a CT), 10-Year Note Auction (12:00p CT), FOMC Minutes (1:00p CT)
THURSDAY: Jobless Claims (7:30a CT), CPI (7:30a CT), Fed Logan Speech (8:30a CT), EIA Natural Gas Report (9:30a CT), Fed Goolsbee Speech (11:00a CT), WASDE Report (11:00a CT), 30-Year Bond Auction (12:00p CT), Monthly Budget Statement (1:00p CT), Fed Balance Sheet (3:30p CT)
FRIDAY: PPI (7:30a CT), Fed Musalem Speech (9:00a CT), University of Michigan Consumer Sentiment (9:00a CT), Fed Williams Speech (10:00a CT), Baker Hughes Rig Count (12:00p CT)
Key Events:
Stock prices are more often a reflection of sentiment as opposed to a reflection of fundamentals. When the sentiment pendulum swings too severely in one direction, it is often when stocks, at least temporarily, put in bottoms or tops.
U.S. consumer price data due this week is expected to show continued upward pressure on inflation, potentially complicating the Federal Reserve’s policy path. Economists predict a modest 0.1% monthly increase in the overall Consumer Price Index (CPI) for March, with the annual rate projected to be 2.6%, down slightly from February.
However, concerns are mounting that tariffs, particularly those implemented in early March, could fuel higher prices in the coming months. While core CPI, excluding volatile food and energy prices, is forecast to rise by 0.3% in March, bringing the year-over-year rate to 3.0%, analysts believe this may represent a floor for core inflation heading into 2025.
*Note, these are “big picture” trading levels and are not for short-term trading. They should be used for leans as you consider short-term positions. Use the HOAG levels for short-term trading.
With economic uncertainty rising, many traders wonder: Where will the stock market find support if things turn sour? Essentially, where’s the “floor” for the S&P 500?
To understand this, let’s look at two key valuation factors:
Current Snapshot:
What Could Happen? Scenario Analysis:
The Cboe Volatility Index (VIX), Wall Street’s “fear gauge,” surged to 45 on Friday, triggering a flurry of market analysis. Traders keenly know that such a dramatic spike often signals heightened uncertainty and potential market turbulence. But what does history tell us about the market’s behavior following a VIX surge to this level?
A review of historical data reveals a pattern worth noting. On balance, instances where the VIX has pierced the 45 mark have been followed by positive returns in the S&P 500 over the subsequent trading days.
Trump’s new tariffs sent stocks plummeting, and economists warned of soaring consumer costs and threats of a potential recession.
Traders must know the increased probability of fast and furious, short-term rips higher. We are now in a “buy the dip and sell the rip” mentality. Watching for a change in narrative and clarity on a Federal tax cut bill, and the corporate buyback cavalry to arrive around the end of the month to provide possible support.
Why the selling? The stock market decline, which began in mid-February, intensified due to inflated valuations and a historically high concentration of market capitalization within the top ten S&P 500 stocks. Adding to these technical pressures, concerns arose regarding the sustainability of the AI infrastructure trade. This led to a significant drop in Nvidia’s stock and a broader decline among the “Magnificent Seven” tech giants, echoing the market’s tendency to correct after periods of tech-driven exuberance, as seen in 2022.
However, the primary driver of market volatility was the rapidly evolving U.S. economic landscape, marked by significant policy shifts and heightened uncertainty. Specifically, clarity on escalating tariffs, changing immigration policies, and increased federal spending are collectively reshaping the economic outlook. In response, economists have revised their projections, factoring in a higher tariff assumption, lower GDP growth forecasts for 2025, and increased inflation and unemployment rate estimates, reflecting a growing sense of economic instability.
Traders had to scramble very fast. The initial market reaction to news of President Trump’s tariff announcement was a stark example of premature optimism. S&P futures experienced a dramatic whipsaw, initially spiking upward on headlines suggesting a “mere” 10% across-the-board import tariff. With S&P futures briefly touching 5755, this fleeting surge reflected the market’s initial, ultimately flawed, interpretation that this would be the extent of the day’s trade-related developments.
Traders, seemingly eager to find a silver lining, believed the 10% figure represented the final, contained scope of the administration’s actions.
However, the brief period of optimism was swiftly shattered as the full extent of the president’s plan became clear. Following the initial headline, a barrage of announcements revealed a much more aggressive strategy, encompassing reciprocal tariffs against virtually all global trading partners.
The realization of this broader, more damaging policy shift sent S&P futures reeling lower, with a dramatic reversal pushing them down to 5515, a 240-point reversal highlighting the market’s miscalculation and the volatility inherent in trading on incomplete information.
Circuit breakers in the ES are not just regulatory mechanisms; they are vital tools for traders to manage risk, understand market sentiment, and adapt their trading strategies in volatile market conditions. For stocks & futures, the Limit Up-Limit Down (LULD) rule prevents trades outside set price bands.
Market-wide circuit breakers trigger halts if the S&P 500 drops:
🔻 7% = 15-min halt
🔻 13% = 15-min halt
🔻 20% = Trading stops for the day
It’s not obvious that the Fed will soon be stepping in to lower rates unless the stock market falls more and the economy stalls.
The Fed Funds futures probabilities of the rate falling to the 325-350 basis point range by December 2025, have increased significantly over the past month, rising from 20.7% to 37.5%.
Market expectations for aggressive Federal Reserve rate cuts have intensified, despite a lack of explicit confirmation from policymakers. The dollar’s recent weakening reflects a growing consensus that the Fed will deliver a full 100 basis points of easing by year-end, a view underscored by the sharp decline in one-year forward SOFR (Secured Overnight Financing Rate) contracts, now trading around 3.15%, down from 3.4% just a day prior.
While Fed Chair Jerome Powell, who spoke on Friday, failed to to explicitly endorse rapid easing, he is expected to reiterate the central bank’s commitment to monitoring labor market conditions and acting if necessary. This delicate balancing act between acknowledging potential economic vulnerabilities and maintaining policy flexibility fuels market speculation about the timing and magnitude of future rate cuts.
Adding to the pressure on the Fed, concerns about a potential U.S. recession are mounting. Goldman Sachs has joined JPMorgan in revising their 12-month recession probability estimates upwards, placing the odds slightly above one-in-three, a figure only marginally below JPMorgan’s 40% projection. This growing pessimism about the economic outlook further solidifies market expectations for substantial Fed easing, as investors anticipate a policy response to mitigate the potential downturn.
Gold’s safe-haven status intact despite recent equity market pullback.
Gold futures prices, fresh off a record high, experienced a sharp $100 correction on Friday, briefly testing the metal’s safe-haven credentials. The sell-off, triggered by a spike in market volatility, prompted a round of deleveraging reminiscent of the early days of the 2020 pandemic.
However, analysts maintain that the confluence of geopolitical tensions, stagflation risks, a weakening dollar, and falling U.S. real yields will continue to underpin bullion’s appeal.
The metal has yet to challenge key support levels, most notably the $2,950 area, representing both the February high and a critical Fibonacci retracement level. A sustained hold above this level would signal a shallow correction within a strong uptrend, reinforcing the bullish outlook.
Source: TradingView
Analysts have lowered their year-end 2025 Brent and WTI crude oil price forecasts by $5 per barrel, now projecting $66 and $62, respectively.
This downward revision reflects the realization of key downside risks, including increased OPEC+ supply and escalating trade tensions. Annual average forecasts for 2025 are now pegged at $69 for Brent and $66 for WTI, with 2026 estimates at $62 and $59. Price volatility is expected to remain elevated due to heightened recession risks, leading to the discontinuation of price range forecasts.
The decision by eight OPEC+ nations last week to implement a larger-than-expected output increase of 411,000 barrels per day in May, compared to the previously guided 135,000 barrels per day, contributes to the revised forecast.
Despite a recent surge in oil futures option implied volatility, some traders believe volatility remains underpriced. Buying protection against further medium-term price declines, such as through oil puts or put spreads, is considered an attractive strategy in the face of rising recession concerns.
From a seasonal perspective, it suggests a strong seasonal pattern for energy futures, with crude oil, heating oil, and RBOB gasoline all showing a tendency to rally between late March and mid-April. Specifically, August crude has averaged a $3+ per barrel increase in 14 of the last 15 years within this timeframe.
Source: TradingView
President Trump’s unexpectedly aggressive tariff announcement, dubbed “Liberation Day,” sparked a significant sell-off in risky assets, spreading to commodities and halving the Bloomberg Commodity Total Return Index’s (BCOM) year-to-date gains.
The move, seen as a declaration of economic war, fueled concerns about global supply chain disruptions and recession risks.
