MARKET WRAP

A wild ride for equities today where the closing prints don’t do justice to the intraday volatility. For the day, SPX -0.2%, QQQ +0.2% and IWM -0.9%. To give you a sense of the illiquidity to the start of the day, the SPX hit 4850 to the downside, and 5245 to the upside in the span of 35 minutes. (tariff headline driven). That’s a nearly 8% range. The VIX got as high as 54, and closed 48, up on the day, despite the rally from lows. Treasury yields were volatile in the other direction from the past few days, with the 10Y yield up 0.22 to 4.22%. It’s quite the battle for bond traders trying to price in a recession, inflation or both. (more on the high levels of volatility at the bottom of this email).

• RiskReversal Pod: The pod went out live this morning to discuss the crash, the politics that may soon come into play, and more.

• MRKT Call: A look at this crash vs historical lessons, levels in SPX that may serve as support, dollar cost averaging in this environment and a long list of symbols analyzed for when they could be buys.

MRKT MATRIX: April 7, 2025

Today’s Top Stories:

• Dow slides more than 300 points as Trump tariffs rattle stocks for a third day (CNBC)

• False Tariff Headline Sends Stocks on $2 Trillion Ride (WSJ)

• Jumping ship: Four more Wall Street strategists cut S&P 500 target on Trump’s tariffs (CNBC)

• How Far Does the Market Have to Fall Before It’s Time to Buy? (WSJ)

• Jamie Dimon Says Tariff Policy Issues Must Be Resolved Quickly (Bloomberg)

• Larry Fink Says Most CEOs He Talks to Think US Is in a Recession (Bloomberg)

• Hedge funds pile up record short bets against stocks as traders go into ‘self-protection mode’ (CNBC)

• Traders Add to Bets on 2025 Fed Cuts With Risk of Emergency Move (Bloomberg)

• China Discusses Accelerating Stimulus to Counter Trump Tariffs (Bloomberg)

Today’s MRKT Call is Presented by MoneyLion

Stocks Whipsaw After Fake Report Trump Is Considering Pause In Tariffs

How does this sell-off compare to other historical crashes and are their any lessons from the past? Some thoughts on dollar cost averaging during a crash. 

• Analysis: SPX, VIX, TLT, Crude Oil, AAPL, NVDA, WMT, META, GOOGL, BABA, JPM, SMH, DXY

• Chart of the Day 1: Prediction markets on the chances of a recession

• Chart of the Day 2: FOMC Rate Cut Probabilities

• Your Questions:

  • How much attention should we be paying to insiders buying their own stock during this crash?

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Today’s RiskReversal Podcast is Presented by CME Group and SoFi

Opening Moves: Trump Tariff Chaos Continues

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What’s Next?

To give you some sense of how high short duration implied volatility is, SPX options are pricing a near 6% move for the rest of the week at 70+ IV. In contrast, out to the end of 2025, SPX options are pricing about a 16% move. (to the upside that's essentially where we were a week an a half ago ~5850).

As mentioned in this weekend’s note, this is some of the highest overnight implied volatility and expected moves you’ll ever see. That means for the foreseeable future today’s volatility (with wild swings intra-day) will be the norm, not the exception. That’s because high implied short term volatility has an effect that exaggerates moves in an already illiquid backdrop. There are many market participants that have no choice but to chase those moves in an attempt to stay delta neutral.

As was mentioned on MRKT Call if you are dollar cost averaging it’s a good time to be waiting for the market to come to you for fills. Chasing an intraday rally or sell-off can mean massive differences in the underlying stocks. (example today, NVDA traded in a $15 range in the span of 30 minutes). Market makers are forced to chase moves, you should not.

For tomorrow, expected moves and implied ranges:

• SPX 3.3% [4850 - 5250]

• QQQ 3.5% [410 - 439]

Again, these are some of the largest expected moves for one day you’ll ever encounter.

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