3/28/25 Live Trading Room Market Recap & Trades
April 2nd Is Underpriced Risk
Expected move for the week is 144 points for SPX, with VIX at 21.65, giving it a 68% chance of moving to either 5436 to 5724 (or not).
We already had a volatile week, with SPX moving peak-to-trough 215 points - luckily I had already given clients 5783 as rejection level with 5553 potential as short target. We tagged high of 5787 Tues before falling into a close Friday of 5572 (but 5553 area afterhours). ;-)
The quarter end this Monday will show one of the worst performances in years, as investor fears triggered equity selling from a host of reasons: tariffs & trade wars, US AI tech dominance & capex/demand questions, inflation rising (PCE) & economic contraction (GDP), consumer confidence crisis & recession risks rising.
The week ahead has a slew of macro event risk - from month end Monday to “Liberation Day” Wednesday to NFP & Powell Friday.
The weekend review is also worth noting, as it’s hard to keep up…
“So far, a slow build weekend! Zelensky flips us the bird, Putin falls out of favor, Iran moves closer to midnight, Greenland invasion in motion, Trump teases 4 more terms, and worst of all, TikTok is getting banned next Saturday.
Welcome to Liberation Wreak Havoc” - h/t @Captionella
And besides Goldman increasing recession odds to 25-35%, they also posted a note last week on April 2nd risks not priced in:
The Trump admin has seen tariffs as a negotiating tool and will likely want to start from a position of strength. A recent Goldman survey shows that market participants believe reciprocal tariffs coming in April will amount to a 9% reciprocal tariff rate. Goldman itself expects that the initial tariff rate could be double that, which would set the market up for a negative surprise next week.
In the weeks following the April 2 tariff news, attention should shift to the fiscal front.
GS also estimates that one of the largest buyers is in blackout, which reduces buying by around 30%.
In the meantime, from a quant perspective, Jason Delorenzo of Vol.Land offered up this insight:
There is very little put support for the April 2 tariff announcement. If the tariffs are a dovish surprise, or even neutral, we can run up to 5900 very swiftly. But if they are a hawkish surprise, IV should shoot up and create a selloff back to lows, and if 5500 is breached, a vol event will likely occur as participants struggle to buy puts.
I will add, that chasing this short Friday worked out better than expected, with price action resulting in big bearish engulfing candles on the weekly which increases likelihood we retest 3/13 lows of 5505 but at least 5553.10 during RTH.
We also had a lovely $170 short price target on AVGO from Monday’s live trading room which worked perfectly - even before Friday’s sell-off:
Updated sector review & trade updates below.