Don't Trade If You Don't Have An Edge

The šŸ”„H.E.A.T.šŸ”„ Formula : AI Driven Insights to Spark Your Portfolio

Author

Matthew Tuttle
April 07, 2025

In Todayā€™s Issue:

  • Trumpā€™s plan for the economy and how it impacts your investments -4/24

  • Will Powell come to the rescue?

  • Quantum computing closer than we originally thought?

  • Why we are starting a wealth management firm

  • Donā€™t trade this market if you donā€™t have an edge

  • and moreā€¦ā€¦..

Announcement

Our Next Webinar

Trumpā€™s Plan For the Economy and How It Impacts Your Investments

Thursday April 24, 2-3pm EST

News & Noise

šŸ§  News:

Trump is calling for a rate cut to rescue markets. Why he might be right.-MarketWatch

This is a major wildcard and the market is currently pricing in a non zero chance of a cut prior to the next meeting. The market is also pricing in a 40% chance of a cut in May, up from 20% prior to all this.

These two stocks havenā€™t sold off as much as the overall market, at least not yet.

The VIX, Wall Streetā€™s 'Fear Gauge', Is Soaring. Hereā€™s Why.-WSJ

My favorite hedge by far. Just be careful here, unlike stocks VIX needs a reason to stay elevated. It definitely has a reason now, but once things change it will drop like a rock. I have a strategy for being long VIX which will be in ETF format shortly (wish I filed for it sooner). Part of the process is I trim into strength and buy into weakness.

This is the reason we are starting a wealth management firm. The conventional investing wisdom is neither. It appears to work most of the time because the market is up most of the time. As Warren Buffett famously said, ā€œwhen the tide goes out you find out whoā€™s been swimming nakedā€.

Saw the crypto bulls out this weekend talking about how Bitcoin is a hedge for market declines. It is many things and I still think we are entering a golden age for crypto, itā€™s not a market hedge.

āŒ Noise:

The Chaos-Resistant Fund Portfolio-Barronā€™s

Obviously Iā€™m a huge fan of hedging, but not after weā€™ve seen a 15% decline in the market. Thatā€™s like trying to get homeowners insurance after your house has burned down. Trump and Bessent warned that was going to happen, everyone should have had hedges in place already.

What Wall Street Is Saying

Jefferies David Zervosā€¦..

The actions of the Trump administration in the global trade arena are intended to force a path toward a ā€˜cooperativeā€™/ā€˜cooperativeā€™ outcome. The downside risks are high, but the potential upside is higher.

Jefferies Aniket Shahā€¦..

We view the proposed rates as a ceiling and expect several countries to engage in bilateral negotiations. We see the market reaction as likely overdone. The announcement shows consistency in Trump's orientation toward a greater role of the state and his continued push to revive the US manufacturing sector.

Jefferies Mohit Kumarā€¦..

Trump will need to back down, but in a way that he can claim victory. How to trade these markets: Focus on sectors that should not have been affected by tariffs but have sold off because of position unwinds or beta. Europe & Asia should outperform on any pullback from a trade war. The rates rally should not have many legs.

BTIG Jonathan Krinskyā€¦.

We won't rehash all the extreme statistics of last week, but many metrics are at panic levels associated with meaningful bottoms over the past 40 years. The issue is when you get into the capitulation zone, markets often move beyond what many think is likely or possible. If we do see more downside on Monday (which seems probable at this point), from a big picture standpoint the SPX's 200 Week M.A. comes in at 4674, or roughly -8% below Friday's low. In the last 40 years, there have only been two sustained breaks below the 200 Week M.A. One was during the ā€™00-ā€™02 bear market, one during ā€™08-ā€™09 bear market. Even the crash of '87 bottomed on its 200 week M.A. We donā€™t know if we get there, but if we do history suggests it holds, at least initially. Some washed-out groups are trying to bottom. At one point on Friday homebuilders were up ~5%. As far as what we still think has timely downside risk, we would reiterate our Friday thoughts that it's the low-vol defensives that have held out. SPLV (Not Rated) had its worst day since 2020 on Friday, but we think there is further to fall for low-vol names. The KBE Insurance ETF (KIE, Not Rated) is only down 2% YTD even after Friday's -7% rout. We also see risk there.

Jones Trading Mike Oā€™Rourkeā€¦ā€¦

While we are not privy to the Trump Administrationā€™s plansā€”and we would argue nobody ever truly knows what action the President will takeā€”there is a path to achieving his goals without triggering a global recession. The President has made it clear he wants to re-establish an onshore manufacturing base, and national security is a key focus of this. The pandemic exposed U.S. supply chain weakness, and the President wants a domestic industrial manufacturing base in case the nation needs to mobilize.

Morgan Stanley Mike Wilsonā€¦..

Barring the White House backing down on its tariff plans or signs of easing from the Federal Reserve, investors should brace for the S&P 500 to slide another 7% to 8%.

Thatā€™s according to a Morgan Stanley team of strategists led by Mike Wilson, who told clients in a note early Monday that the next level of support for the index

ā€” the point at which buyers will step in ā€” now sits at 4,700. They add that valuations offer better support at that level, which is close to the 200-week moving average, a longer-term indicator of technical trends.

Donā€™t Trade If You Donā€™t Have An Edge

As I said on Friday thereā€™s no real playbook for this, no edge in trying to trade this market. On the weekly chart there is some support in the 500 area. If that doesnā€™t hold you look at 450ā€¦..

Jim Cramer talked about today possibly being a Black Monday. Down around 3.5% as I write this, which sucks, but far from Black Monday.

There are positives, the 10 yr rate is now under 4% and could head back to 3.6%ā€¦

As I pointed out above, Donā€™t be shocked if we get an emergency Fed rate cut.

I have to go to a monthly chart to find the last time oil prices were this lowā€¦..

CPI and PPI are this week. On the one hand you could say that anything backward looking doesnā€™t matter at this point, however, a cool number could give Powell some breathing room to cut rates if he wanted to.

I donā€™t like definitions like bear market or correction, but we are in a bear market environment. Expect to see an upmove at some point, but remember, there is more going on here than tariffs. This started with the DeepSeek news which got people asking some uncomfortable questions about AI. I find it unlikely that we get the same type of V move we got after Covid. Until this all gets sorted out I would be very careful, and I donā€™t think this gets sorted out anytime soon. Trying to play a market where you have no edge is the same as gambling. I was talking to a hedge fund manager this weekend who wasnā€™t sure what to do, so my answer was do nothing. Once this move stops I think we get a traderā€™s market where you can make money long or short, if you are nimble. A lot of the advice I am seeing out there from fully invested portfolio managers is buy stocks at these prices and hold for the long term. Maybe that works out well, but I wouldnā€™t be buying here yet.

Gold miners are an area I will be watching. I usually watch them closely, but took my eye off for a moment and missed the upmove. Not going to try to catch a falling knife or guess at a bottom, but may go long if I see a nice set up emergeā€¦.

Same with Silverā€¦..

I rejected the urge to buy into German stocks and will probably reject the urge to buy the dip, unless we get back to the lows for the year, then it could be temptingā€¦..

Before you go: Here are ways I can help

ā€

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    The views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal. Trade notifications are for informational purposes only. TCM offers fully transparent ETFs and provides trade information for all actively managed ETFs. TCM's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades.TCM is not a commodity trading advisor and content provided regarding commodity interests is for informational purposes only and should not be construed as a recommendation. Investment recommendations for any securities or product may be made only after a comprehensive suitability review of the investorā€™s financial situation.Ā© 2025 Tuttle Capital Management, LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.