Unprecedented & 'Tariffying'! - Thomas Ng Memo 6 April 2025
- whatsyourtradingangle
- Apr 20
- 3 min read
AI image generator says Trump decides to unleash his pet bears in every corner of the globe..
On Sunday, April 6 at 945pm, I emailed Clients my latest market update titled "Unprecedented & Tariffying", offering key insights on the S&P 500 (aka SPX) - the world's most important index - and more.
Below is the full transcript for your perusal:
'Dear Clients,
Things are moving quickly - this is just a short update to keep you informed.
Here are a few key points to note:
- In my 17 March memo, I highlighted turning bullish on the S&P500 Index (SPX) as long as the 5,500 support level held.
- Unfortunately, that support was broken authoratively following the release of new data and developments - specifically, the unprecedented scale of Trump’s global tariffs, something markets arguably haven’t seen since the 1930s.
- With the break of 5,500, the original Cup & Handle target of 6,220 mentioned in my 2 Oct 2024 memo, will be relegated to a lower probability event now.
So, where is the next support level for the S&P500 (SPX)?
I initially guided my team that the next likely support zone would be around the 5,100 level (ie. the August 2024 low, during the Yen carry trade unwind scare) and the psychologically important 5,000 mark.
However, after a closer review using the Fibonacci Retracement tool over the weekend, I see the more probable support zone lies between 5,000 and 4,800, with ~4,800 representing the 50% retracement of the entire rally from the 2022 lows. See Chart A below.
To put this in perspective, a drawdown to 4,800 would mark a 21% decline from the 19 Feb 2025 all time high, which will almost certainly trigger mainstream media headlines of a “TRUMP-INDUCED BEAR MARKET OR RECCESSION” for the S&P500 (Nasdaq is already in "bear market" territory). IMHO, this may possibly put more pressure on Congress or prompt some form of real policy response or clawback from Trump’s tariffs team.
Chart A - SPX Daily Chart dated 6 April 2025, will the blue zone hold the 'tariffying' carnage?
It sure did!!
That said, I’d like clients to keep two important points in mind:
1. The current market development is unprecedented - the current shock perhaps comparable in scale to events like COVID or Lehman. Naturally, panic and fear now dominate the markets.
FYI, the CNN Fear & Greed Index is at 4 (Extreme Fear).
The AAII Sentiment Survey has recorded five straight weeks with bearish sentiment above 50%, which is also extreme by historical standards.See attached Charts.
Chart B - The CNNmoney Fear & Greed Index dated 4 April 2025. As they always say, be careful what you wished for. - there you go, single digit Extreme Fear Index. Now, the million dollar question, do you dare to buy?
Chart C - The AAII Sentiment Survey dated 2 April 2025
2. Price action is highly volatile and reactive to news now, especially regarding potential policy responses from other economic majors.
Should there be any sign of tariff moderation, pullback, or withdrawal, markets could rebound sharply.
I will continue to monitor closely and update you should there be more signs of markets bottoming.
As always, feel free to reach out if you’d like to review your portfolio or explore other opportunities in the current environment - including the potential benefits of my income-yielding Bond Portfolio, which may also serve as a strategic hedge within your broader asset allocation.
Live Long & Trade Well.
Thank you & regards,
Thomas Ng, CMT
Principal Trading Representative
首席股票经纪
www.thom-ng.com
Chart source: Tradingview / cnn.com / aaii.com '
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