To say the market is in rough shape right now might be the understatement of 2025…
Over $3 trillion in value has been wiped out over the past few days, and there’s a good chance we’re not done yet.
What’s even more surprising is how blindsided investors seem to be. Trump has been talking about these tariffs for months, and yet when the details finally dropped, it was like the market had never considered the possibility.
I’ll be honest: I don’t get it.
It does have shades of Covid crash though.
Don’t forget: Before the collapse, Covid had been massively in the news. Stories from China and what was happening were easy to find. The market really shouldn’t have been as shocked as it was then either…
But then it happened:
The market dropped 5% in two days on news we kind of knew was coming.
It priced it in quickly though, right?
Well, not so much…
A few days later and the market shed another 5% before it started bouncing.
Oh, but it wasn’t done yet…
All in all, we had about a 30% rip from high to low. And not a whole lot changed from the initial news to the bottom either.
It was a mix of it being priced in combined with the fear yanking liquidity out of the market and making it drop more.
And that’s kind of what this week feels like.
I personally view it as a great buying opportunity, but whether that opportunity starts now or 10% or 20% lower is where the rubber meets the road.
And I’ll keep reminding you:
The big thing to watch next is insider buying. If company insiders start stepping in, that could be a sign we’re nearing a bottom. Just like they did at the end of March 2020, timing the bottom:
But if they hold off, it means they’re bracing for even more downside.
My point here is that as ugly as this is, we’re not out of the woods yet. It’s worth remembering that during the COVID crash, we didn’t get a true recovery until after three to five massive shakeouts. The market had to get completely washed out before it was ready to rally.
To me, this still feels like an over-correction — but just because it’s overdone doesn’t mean it’s ready to bounce. Until we see liquidity — real capital coming back into the market — don’t expect a V-shaped recovery.
That said, if you’re looking to nibble at some higher-risk names while they’re on sale, the Magnificent 7 (MAGS) might be a good place to start. They’re down nearly 30% from their highs, despite many of them reporting record earnings.
I will be accumulating some names like MAGS from here but I am prepared to take a deeper hit and it’s important to have eyes wide open on that front.
On the active trading side, I think “pair trades” are the absolute best bet out there right now.
It’s one of the most reliable strategies out there when volatility is off the charts.
The idea is simple: buy a strong stock and short a weak one — ideally in the same sector. That gives you a built-in hedge. If the market crashes, the weak stock likely drops harder. If the market rallies, the strong stock should outperform. And if the market does nothing? There’s still a good chance your trade works, because you’re playing the relative performance of one stock versus another.
Take EQT vs. PSX. EQT was holding up better in its group, and PSX had been one of the weakest. When the market dropped, EQT dipped — but PSX really rolled over. That’s the kind of trade we’re looking for.
It’s not about picking the direction of the S&P or timing the Fed. It’s about identifying where strength and weakness already exist — and putting that to work.
At 1:30 PM ET today, I’ll be walking through the market outlook and I’ll be going over my three favorite new pair trades in the live room.
If you’re looking for ways to play both sides of this split-market personality, come hang out. Let’s get ahead of it — together.
Check out this Mapping the Market session where I discuss it all!
— Nate Tucci
