Technical Analysis Weekly Recap - April 5, 2025

The group reviewed the recent market downturn, with one participant explaining a strategy of buying smaller quantities of stocks at key price levels, and another emphasizing the use of inverse ETFs to hedge against further declines. They analyzed market sectors, individual stocks, and the economic impacts of tariffs and interest rates. The conversation concluded with cautious investment outlooks given current market conditions.

Next Steps

Monitor market developments over the weekend, especially any announcements regarding retaliatory tariffs from China.
Remain cautious and wait for market confirmation before making significant trades, given the current downtrend.
Watch for the start of earnings season next week to gauge its effect on valuations.
Track key support levels in major tech stocks for potential trading setups.
Consider inverse ETFs and put options as possible strategies during market weakness.
Observe Vietnam’s response to tariff changes, as it may impact footwear and apparel stocks.
Review a shared video analyzing the impact of tariff wars.
Update the momentum dashboard visualization to address clustered data.
Analyze charts for inverse ETFs and TLT for trade ideas next week.
Evaluate Tesla covered call positions and consider closing one contract to begin a weekly strategy.
Research potential bargain stocks for long-term investment opportunities.
Continue dollar-cost averaging into index funds while maintaining a cash position in money market funds.
Add new members to the communication platform.

Summary

Navigating Market Downturn with Strategic Buying

One member shared a revised approach to investing during the downturn, purchasing smaller quantities of stocks at critical price levels to stay active while avoiding large losses. It was noted that portfolio flexibility was limited due to account restrictions. The group reviewed steep declines in the Dow, Nasdaq, and Russell 2000, with projections suggesting further downside. Some participants opted to stay on the sidelines, while others successfully traded SPY puts to benefit from the pullback.

Inverse ETFs and Market Patterns

A strategy centered on inverse ETFs was discussed as a protective measure during downtrends. Emphasis was placed on chart pattern recognition, such as double and triple tops, as indicators of potential reversals. Patience and discipline were encouraged—waiting for a confirmed bounce rather than acting on optimism.

Market Pullback and Energy Sector Trends

The discussion turned to the continued weakness in small caps and the Russell Index. It was noted that the market was largely being supported by retail traders. The VIX broke multiple resistance levels, signaling elevated fear. The energy sector was among the hardest hit, attributed to increased OPEC output and companies' efforts to maintain dividends and buybacks.

Sector Analysis and Stock Performance

Energy, financials, industrials, materials, and technology were identified as the most affected sectors. In contrast, consumer staples, real estate, and utilities showed relative strength. Inverse ETFs were showing high momentum, suggesting continued risk-off sentiment. Specific stocks such as Pfizer, 3M, and Sony were analyzed for current price behavior and potential setups. The importance of preserving capital during downturns was stressed.

Long-Term Investing Principles

The conversation included a reminder that time in the market is a valuable asset, especially for younger investors. A long-term view with consistent contributions was recommended using the S&P 500 as a historical reference. The group analyzed stocks like Deckers, Nike, and Apple, discussing support levels and volume behavior. A target price of 173 was suggested for Apple, indicating broader weakness if reached.

Market Volatility and Put Options

The group assessed the market’s response to recent tariff announcements, likening the shock to previous crises like COVID-19 or 2008. Some believed Vietnam’s cooperation on trade could benefit certain sectors. The use of put options was debated, with several members citing recent profits on SPY puts. It was noted that while puts and calls function similarly, puts are generally riskier over longer timeframes due to the market's historical upward trend.

Trade Policy and Economic Strategy

There was a discussion on efforts to bring manufacturing back to the U.S. and rebalance global trade. While the goal was seen as worthwhile, the group acknowledged short-term pain for companies and consumers. The effects of automation, labor costs abroad, and inconsistent policies across administrations were also discussed. The structure and pass-through effects of tariffs were clarified.

Economic Outlook and Policy Concerns

Participants shared concerns about a potential recession, citing declining consumer spending, possible layoffs, and slower GDP growth. Although job reports remained strong, questions were raised about whether the Federal Reserve might be too late in pivoting interest rate policy. Additional concerns included inflation, political pressure on the Fed, and the complexity of managing supply and demand during downturns.

Stock Performance During Volatility

Stock performance was reviewed with a focus on recent declines in tech stocks—particularly the “MAGMA” group (Meta, Apple, Google, Microsoft, Amazon). Other stocks analyzed included Wingstop, Ross Stores, Abercrombie & Fitch, Boeing, BlackRock, and Costco. Support levels, price movement, and possible long-term opportunities were discussed. It was noted that traditional valuation methods may not apply in such volatile environments.

Market Outlook and Current Strategies

Investment strategies varied across the group:

One participant anticipated a market rebound within 18 months and was considering going long.
Another focused on inverse ETFs and bonds.
Others maintained conservative positions in money market funds while continuing to invest through workplace retirement plans.
Bargain hunting was a theme, with an emphasis on long-term holding strategies.
Covered call strategies were also discussed as a way to manage positions and generate income.

The group concluded by emphasizing caution in the current market environment and agreed to reconvene next week to assess progress.