A Comment -- General Comments From an Expert (A Commentary)

Needs more details, but it sounds like the caller is hedging long exposure to his underlying bank stocks by owning put spreads (great). Depending on where the put strikes are, take your profit on the long end and expose your naked put to add to the position. Look at the price of volatility in the short run vs. what you will pay to roll those out to the back months. Needs more time to explain more. Don't sell calls here, not when the market is down.

The government interest rate is 2.75%, and it's looking 60/40 for a rate cut. To do better than this, buy a dividend stock. It is what it is. There is no super-safe strategy without risk. Doesn't exist.

The Pro-Eyes S&P Opportunity Index is sharply up, therefore issuing caution. But during the flash-crash of spring 2020 and other corrections, the index flashed opportunity. So, be prepared to add to your favourite names on crazy days. However, we could see a couple quarters of choppiness. What this index doesn't say is how long choppiness will last. We are oversold enough for a trading rally. Secondly, the Tactical Risk Monitor shows that we are set up for a bounce and rally, but we need a headline from the White House or Congress saying they will handle tariffs better. The rumour this morning saw markets briefly rip. Likely, the bounce will be moderate, with resistance at 5,500 on the S&P, over the next month at least. Technically, the market is very oversold. The S&P trough in 2022 to the high recently: the tariff sell-off in recent days slashed those gains in half, back to the high of 2021. Now, we have good support and a good time to buy, BUT this situation may not hold for sure. Next support is 4,500 then low-4000s. We're not free and clear yet, but this is a tradable rally now. 

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The rollout was awful. The US administration talked about fair treatment, so he went and looked at existing tariffs on US goods into other nations, and they're astronomical. So he sort of gets it. Vietnam, for example, was slapped with a 45% tariff; well, they have a 90% tariff on US goods.

When you look at what the end game is, which is some version of free trade, the end goal is kind of noble. But the rollout was terrible. With the exception of food security, everything else is open to negotiation and that's what we'll get to eventually on free trade. 

This doesn't feel as though it's going to break quickly, but we're in a time of cascading news such as China's response today. Every country has to start to negotiate.

There are a couple of different gauges out there, with 100 being total exuberance. Today we're at 4, exceptionally washed out. When things speed up like this, investors should slow down. If you're a short-term trader, and you wanted to short, you're too late. At the moment, you're probably better to look at where there's value right now than trying to protect anything.

He looks for things that pop up and grab his attention to say that we're getting close to a bottom. There is some speculation that the current situation is going to look like a "V" on the chart, because the macro picture is still decent.

The first thing he'd look at would be sentiment. You can look at the Fear & Greed Index, made up of 7 components. Right now we're at 4, and you can't go below 0, so we're getting there. You can also look at the put/call ratio. Look for things that are have suffered a bit but, overall, are working quite well on a day like today. 

You're not going to time it perfectly, but these indicators tell you when it's time to start hunting.

Best way to invest is to put money in over time, taking out some of the guesswork of trying to be spot-on. If you've always wanted to own a stock, buy half today. Then wait and watch for opportunities to dip in again.

Acting quite well. He's been picking some up, including a broad-sector one in the US. Rates coming down has certainly helped, as it makes housing more affordable. Lots of predictability in this sector and usually (though not always) safer. Income you get from it tends to buffer against other issues.

It's also local, so tends not to be impacted as much by the macro. What we're seeing in the markets now is because everyone will be impacted, but having a more "domestic" look insulates you a bit.

We could be on one of three paths: 1) This is a quick bear market (i.e. Covid 2020), 2) year 2000 bear market when tech was laid to waste for a long time, or 3) the big kahuna of October 1987 when the market went down hard on Wednesday, Thursday, Friday then harder on Black Monday, falling 22%. Fortunately, we saw an excellent set of employment numbers, which may make it less likely that a stock market crash will lead to a recession, but if Trump stays stubborn and does nothing to lessen the damage the last few days, he will not be constructive (though contain his anger). None of this has to happen. If Europe moves against our tech companies with tariffs on Monday, we could see another crash, like Black Monday.

Tariffs have plunged the tariffs by over 2000 points. How can we focus on the long term when the short term is a horror show? Tariffs are incoherent, enormous, not reciprocal--and needless. It's like Trump wanted to be as dramatic as possible, like a TV show, not like he's running a country. But the stock market doesn't want Trump or a TV show. We want a president that can get things done and not throw us into a recession. He should be worried about a crash or recession which looks very possible. Mr. President, don't cause a crash--it will be your legacy.

Trying to Time the Market is a Fool's Errand

There is a reason that trying to time market bottoms and tops are what most would call a ‘fool’s errand’, and this is mostly because market bottoms and tops are exclusively obvious in hindsight, but also because it goes against our basic human nature. When the markets are declining day after day, and there is seemingly no end in sight, our instincts are to assume that this trend will continue and fear that the markets will not recover for quite some time. On the contrary, when markets are rising day after day, it is easy to believe that this trend will continue and human emotions stoke a fear that selling at those levels would be ‘too early’. Calling the winter market top of 2021 is now obvious in hindsight – inflation was picking up and the Fed was preparing for higher rates and reduced liquidity, but yet most investors chose not to sell – why? We believe that it is because most investors believed that the markets would continue their climb higher, as was the case in the latter part of 2020 and throughout 2021. Investors’ fear of selling at that point and regretting selling too early was high. 
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Last time we saw this was in March 2020, when everybody thought we were all going to die. Markets came back fairly quickly from that. This has a bit of a different feel to it.

We haven't had a proper bear market in NA since 2009. We've had 16 years of a bull market punctuated by some minimal corrections. So it could be that we're seeing the market turn over here, possibly heading for a bear market.

The Mag 7 have really been the ones leading the market downward. Those were the ones with the highest multiples and that have been lagging the market at least since the inauguration.

Other sectors are doing relatively well. With all the tariffs on retail products that are generally made in developing countries, it's surprising that dollar stores and COST are actually up today.