Stock Market Bottom Could Be In As Tariffs Begin

Tariff day is here. Love it or hate it, we have another highly anticipated event after the close. My sentiments have been shared many times. I am firmly against tariffs. All of them. Not just what the U.S. is retaliating for. No one wins a trade war. There are just varying degrees of losers. I hate losing.

I heard a Canadian politician on TV this morning saying how much he loved the American people. His beef was only with Donald Trump and his tariffs. The anchor then listed a bunch of tariffs that Canada has had on the U.S. for decades. The politician stumbled and bumbled his way to saying that if the U.S. removed all tariffs, so would Canada which is what Trump wants, free and fair trade. So do I although I would use the World Trade Organization instead of tariffs.

On the way to work I thought about my 8 year old car which I have been debating replacing for 6 months. The President thinks if he tariffs foreign cars I will just buy an American one. In my case that’s not true. I won’t pay up for what I want. Rather, I will likely put a bunch of money in my old car and either drive it into the ground or wait until prices come down. I know I can’t be the only one who thinks like this.

The stock market has been choppy and volatile as I warned in my 2025 forecast. The Volatility Index is below. It’s not COVID Crash or 2008 volatile, but there is discomfort. When it declines back into the teens, investors will feel better.

For a month I have offered three viable scenarios for the stock market. The most likely one seems to be playing out right now. That was seeing an initial market low in mid-March followed by a bounce that failed and rolled over to somewhere around 5500 on the S&P 500. To be fair, I wanted that second low to occur in mid-April so the decline would look totally complete. The ingredients are certainly in place for a bottom. It’s not perfect and we didn’t see the panic that I would normally expect with a short and sharp 10% plunge. Buying weakness is now the correct strategy until proven otherwise by a close below 5500.

Scenario number two had stocks rallying in stair step fashion back to the 6000 area in Q3 and the rolling over to new lows well below 5500 by year-end. The least likely scenario had stocks bouncing after the March low and then falling sharply towards 5000 in Q2. That remains technically possible but not likely.

Bottom line is that the stock market is positioned to rally.

On Monday we bought CYBR and more XHB. We sold SSO. On Tuesday we bought more WMT, QLD, MQQQ, UWM and VGK. We sold QID, IMOM, some NEM and BMY.